LYNDHURST, N.J., Aug. 12, 2005 (PRIMEZONE) -- Harvey Electronics, Inc. ("Harvey Electronics") ("Harvey" or the "Company") (Nasdaq:HRVE) announced sales results for the first nine months and third quarter of fiscal 2005, ended July 30, 2005.
For the nine months ended July 30, 2005, net sales aggregated at $30.8 million, a decrease of approximately $2 million or 6% from the same period last year. Comparable store sales for the nine-month period ended July 30, 2005 decreased approximately $2.2 million or 6.6% from the same period last year.
For the third quarter of fiscal 2005, net sales aggregated $9 million, a decrease of approximately $1 million or 10.2% from the same quarter last year. Comparable store sales for the third quarter of fiscal 2005 decreased approximately $1.2 million or 11.6% from the same quarter last year.
Franklin Karp, Chief Executive Officer and President of Harvey Electronics stated, "We are obviously disappointed with the sales results to date for fiscal 2005. Comparable store sales have declined since the end of January 2005, primarily from reduced retail store traffic resulting in lower video sales. Video sales have declined as a result of reduced DLP, CRT and DVD sales and to a lesser extent from price compression, an overall 2% reduction of flat panel unit sales and certain product shortages.
"We believe consumers are now more price sensitive relating to their flat panel purchase. We believe perspective buyers are delaying their decision as they expect flat panel prices to significantly decline further. Additionally, consumer uncertainties and confusion regarding current technologies continues to be a problem within the industry. It is our job to better educate our customers and to expose them to the ultimate home theater experience. As video products are affected by price compression, it is an opportunity for Harvey to attach additional higher margin audio components, accessories and labor to build the perfect home theater.
"We have experienced flat panel growth in larger size plasma and LCD televisions while reporting declines in smaller screen sizes. Additional sales of larger screen flat panels have provided additional installation opportunities for the Company.
"While the Company has experienced a decline in retail store traffic, its higher margin custom installation business has remained strong in both overall dollars and as a percentage of net sales. The Company's custom installation sales of both equipment and labor remained quite stable and accounted for 62.5% of net sales for the first nine months of fiscal 2005, as compared to 59% of net sales for the same period last year. As a result of the Company's strong custom installation business, inclusive of a 13.5% increase in labor sales, coupled with the strong attachment of higher margin accessory sales, the Company's overall gross profit margin is expected to improve for the first nine months of fiscal 2005 and remain stable for the third quarter of 2005, as compared to the same periods last year.
"The decline in comparable store sales during the period has been reported by other reporting electronics retailers in our industry as well as by many smaller independent non-reporting retailers across the country.
"Customer interest and traffic during our Bridgewater, New Jersey grand opening event was very encouraging. We believe the demographics of Somerset County will be conducive to this store's expected success."
Mr. Karp concluded, "We expect to report a loss for the third quarter and the nine months ended July 30, 2005. We have been proactive in reducing payroll and other costs where appropriate, while cultivating our service offerings. We also expect to announce the engagement of a new advertising agency shortly, and will introduce a new advertising campaign in the latter part of the fourth quarter. Our marketing expenditures will not be diminished in fiscal 2005 and we will endeavor to better target our customers through direct mail and e-mail promotions among other media choices. The Company will continue to market and sell the finest audio/video and home theater products while offering professional custom installation services to our affluent customers while working to expand our relationships with builders and contractors."
Harvey Electronics is a leading retailer and custom installer of high quality, exclusive home theater, audio and video products in the metropolitan New York area. The Company currently operates a total of nine locations; eight Harvey showrooms and one separate Bang & Olufsen branded store. There are two Harvey locations in Manhattan and six suburban locations in Paramus, New Jersey; Mt. Kisco, in Westchester; Greenwich, Connecticut; Greenvale/Roslyn, on the north shore of Long Island, in Eatontown, New Jersey and our newest store in Bridgewater, New Jersey. The Bang & Olufsen branded store is located in Union Square on 927 Broadway at 21st Street, in Manhattan. The Company also has a Bang & Olufsen showroom within our Harvey retail store in Greenwich, Connecticut.
Audio Video International, a well-respected trade publication, has named Harvey Electronics a national "Top Ten Retailer of the Year", six years in a row.
Please visit a Harvey store or one of our Bang & Olufsen showrooms. Ask about our Trade-In and Trade-Up Program and turn your old ordinary audio components into cash, to be used towards the extraordinary products you have always wanted. Experience a Harvey home theater, including a high-definition plasma flat screen, LCD or DLP television, DVD player and superior audio components controlled by one, easy to operate, remote control and presented in beautifully designed home vignettes, also featuring the finest in audio/video furniture. Also, please inquire about Harvey's custom installation services.
From time to time, information provided by the Company, statements made by its employees or information, included in its filings with the Securities and Exchange Commission may contain statements, which are so-called "forward-looking statements" and not historical facts. Forward-looking statements can be identified by the use of words such as "believe", "expect", "intend", "anticipate", "in my opinion", and similar words or variations. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual future results may differ significantly from those stated in any forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including, but not limited to, product demand, pricing, market acceptance, litigation, risks in product and technology development and other risk factors detailed in the Company's Prospectus dated March 31, 1998 and from time to time in the Company's Securities and Exchange Commission reports including its Form 10-K and Forms 10-Q.
For more information and showroom locations, visit our website at www.harveyonline.com.
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