New Focus Delivers Dramatic Increase in Earnings Per Share, Gross Profit
Margins
SAN FRANCISCO, Jan. 25 /PRNewswire/ -- Good Guys (Nasdaq: GGUY), a leading
specialty retailer of consumer entertainment electronics, today announced that
net income for the first quarter of fiscal 2000 increased 240 percent to
$5.6 million from $1.7 million in the prior-year period.
Earnings per diluted share for the quarter ended December 31, 1999, rose
125 percent to $0.27 on 21.0 million shares, versus $0.12 on 14.3 million
shares during the first quarter of fiscal 1999.
Gross profit margin improved to 30.0 percent from 24.3 percent the year
before, representing a 24 percent increase and reflecting the Company's
emphasis on higher-margin digital and high-tech consumer entertainment
electronics.
As previously reported, sales during the quarter were $262.2 million,
compared to $294.1 million during the same period last year. The expected
decline in overall sales was primarily due to the discontinuation of
low-margin computers and home office products as of September 30, 1999.
Comparable store sales for continuing categories decreased approximately
1 percent from the same period last year, while total sales for continuing
categories increased approximately 1 percent.
Good Guys Turnaround Strategy Producing Results
"This was our first full quarter after implementing the major steps of our
turnaround strategy, and the results validate its soundness," said Ronald A.
Unkefer, founder, chairman and chief executive officer of Good Guys. "Our
efforts to tighten operations, lower costs and reposition Good Guys are having
a dramatic impact. We are optimistic that we will be able to further
strengthen our product differentiation, drive demand throughout our customer
base and continue to enhance our financial position in the months to come."
Unkefer noted the following financial highlights during the quarter:
-- Replacing Good Guys' inventory of low-margin personal computer and home
office products with higher-margin personal entertainment electronics
delivered a significantly improved gross profit margin that was well
ahead of the Company's expectations for the quarter.
-- Same store sales improved month-to-month during the quarter and
increased in the November-December timeframe, when the Company launched
an aggressive advertising campaign targeting early-adopting, tech-savvy
customers.
-- Sales of higher-margin digital and high-tech products -- particularly
DVD players, digital cameras and camcorders, and high-definition
televisions (HDTV) -- were especially brisk.
-- Extended service contract sales and inventory turns on continuing
categories increased from year-ago figures.
Next Phase of Turnaround to Begin
"In the past few months, we have overhauled our inventory, upgraded our
training programs for sales associates, improved relations with our vendors
and further differentiated Good Guys from our competitors," said Unkefer. "We
are effectively repositioning Good Guys as the retailer of choice for early
adopters and product-savvy consumers who demand fully featured digital and
high-tech entertainment electronics. From a financial standpoint, we have
shored up our cash position, negotiated a favorable new credit facility and
improved credit terms with our vendors."
"Given the success of these changes, we're now ready to begin the next
phase of our turnaround," Unkefer continued. "Our priorities during the first
half of calendar 2000 will be to improve same store sales, continue reducing
operating costs, implement additional marketing agreements with vendors of
higher-end consumer entertainment electronics, and successfully launch
goodguys.com."
The newly formed goodguys.com will operate as a separate company and will
be dedicated exclusively to selling high-end, fully featured products to
tech-savvy, early-adopting consumers online. goodguys.com is expected to be
fully operational in the second quarter of calendar 2000.
The Company also said that it is currently negotiating strategic product
partnerships with several vendors of leading-edge consumer entertainment
products and expects to announce details of the agreements within the next few
weeks.
"We're excited about implementing the next phase of our turnaround," said
Unkefer. "We continue to be confident that we will reach our profitability
goals for fiscal 2000, meet or exceed industry average earnings next year, and
be recognized as the best-run specialty retailer of consumer entertainment
electronics by 2002."
Good Guys is a leading specialty retailer of consumer entertainment
electronics, operating a total of 79 stores in California, Washington, Oregon
and Nevada, and marketing a broad range of high quality, name brand products.
For more information on Good Guys, including news releases, product
information and store locations, visit http://www.goodguys.com.
To the extent this news release contains forward-looking statements, such
statements are subject to risks and uncertainties, including, but not limited
to, the success of the Company's current restructuring program, increases in
promotional activities of competitors, changes in consumer buying attitudes,
the presence or absence of new products or product features in the Company's
merchandise categories, changes in vendor support for advertising and
promotional programs, changes in the Company's merchandise sales mix, and
economic conditions.
Good Guys, Inc.
SELECTED FINANCIAL DATA
(Unaudited)
Quarter Ended December 31: 1999 1998
Sales $262,212,000 $294,098,000
Net Income $5,619,000 $1,652,000
Net Income Per Share
Basic $0.29 $0.12
Diluted $0.27 $0.12
Average Shares
Basic 19,700,000 14,250,000
Diluted 21,024,000 14,250,000
Good Guys, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands except per share data)
Three Months Ended
December 31, 1999 December 31, 1998
% of % of
Amount Sales Amount Sales
Net sales $262,212 $294,098
Cost of sales 183,434 70.0 222,648 75.7
Gross profit 78,778 30.0 71,450 24.3
Selling, general and
Administrative expenses 72,456 27.6 68,258 23.2
Income from operations 6,322 2.4 3,192 1.1
Gain on sale of land 1,025 0.4 -- --
Interest expense - net 1,728 (0.7) 588 (0.2)
Income before income taxes 5,619 2.1 2,604 0.9
Income taxes -- 0.0 952 0.3
Net income $5,619 2.1 $1,652 0.6
Net income per common share
Basic $0.29 $0.12
Diluted $0.27 $0.12
Weighted average shares
Basic 19,700 14,250
Diluted 21,024 14,250
Good Guys, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
(Amounts in thousands) 1999 1998
ASSETS
Current Assets:
Cash $1,354 $13,228
Receivables 27,379 34,282
Inventories 128,290 148,295
Prepaid Assets 11,289 6,379
Total Current Assets 168,312 202,184
Property and equipment, net 73,958 72,597
Other assets 7,645 6,376
Total Assets $249,915 $281,157
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $74,778 $111,448
Accrued expenses 59,372 56,050
Total Current Liabilities 134,150 167,498
Revolving Credit Debt 13,346 --
Shareholders' equity 102,419 113,659
Total Liabilities and Shareholders' Equity $249,915 $281,157
SOURCE Good Guys
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http://www.thegoodguys.com
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http://www.prnewswire.com/comp/108403.html or fax,
800-758-5804, ext. 108403
CONTACT:
Kristen Malacarne of Good Guys, 214-220-2484,
or 214-616-8755
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