Completes $100 Million Credit Facility; Eliminates Computer and Home Office
Products
SAN FRANCISCO, Oct. 8 /PRNewswire/ -- The Good Guys! (Nasdaq: GGUY), a
leading specialty retailer of consumer entertainment electronics, today
announced sales for the fiscal fourth quarter ended September 30.
During the quarter, The Good Guys! liquidated its entire inventory of
computer and home office products to focus exclusively on consumer
entertainment electronics and also aggressively closed out other
non-performing and discontinued inventory. The company experienced a decline
in sales in large part due to these initiatives. Fourth quarter sales were
$191.9 million, a decrease of approximately 13 percent from $220.1 million in
the fourth quarter of fiscal year 1998. Same store sales for continuing
categories decreased approximately 4 percent. Comparable store sales for the
quarter declined approximately 15 percent from the same period last year.
For the fiscal year ended September 30, 1999, sales decreased 1 percent to
$915.5 million from $928.5 million for the previous fiscal year. Comparable
store sales for continuing categories for the year increased 1 percent.
Overall, same store sales declined 4 percent. The company anticipates a
material operating loss for the quarter and, as previously reported, expects
to take a substantial restructuring charge.
"The sales decline for the quarter was in line with our expectations,
given the discontinuation of low-margin computer and home office lines, an
intermittent shortage of in-demand products in our inventory, the management
and marketing transition, and our credit negotiations with vendors and
lenders," said Ronald A. Unkefer, founder, chairman and chief executive
officer of The Good Guys!. "We have made tremendous strides in revamping our
inventory to reflect our focus on premier consumer electronics and in
establishing favorable credit terms with our vendors that will help ensure a
robust inventory of the most exciting and in-demand new products. When
combined with the upcoming launch of our aggressive new branding and
advertising campaign, these initiatives should support our continued progress
towards our profitability goal."
Important fourth quarter milestones included:
-- Completion of steps to ensure operational savings of over $15 million a
year beginning in fiscal 2000, which began on October 1;
-- Receipt of funding for a three-year, $100 million credit facility from
Bank of America and GE Capital. This new facility increases the company's
borrowing capacity by approximately 33 percent, significantly strengthening
the company's inventory purchasing power. The facility replaces a $75 million
credit facility with a different lender and provides lower interest rates and
more favorable terms;
-- Liquidation of entire inventory of computer and home office products,
allowing the company to expand its selection and categories of more profitable
entertainment electronics;
-- Renegotiation of open lines of credit with 98 percent of the company's
vendors. A substantial number of vendor agreements include improved terms and
conditions;
-- Increase in inventory of fully featured and higher-end consumer
entertainment electronics, using funds from the company's recently completed
$16.25 million private placement;
-- Reduction of closeout and out-of-carton inventories through aggressive
markdowns, enabling the company to close the fiscal year with the lowest
percentage of discontinued products in recent years.
"We expect these actions, coupled with other initiatives already underway,
to significantly contribute to improved sales and overall financial
performance as we enter a new fiscal year," said Unkefer. "We now have an
abundant supply of exciting high-margin, high-demand products arriving on our
store shelves and are poised to offer our customers the most distinctive
selection of entertainment electronics in the market, including the newest
digital and high-tech models."
The 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 The Good Guys!, including news releases, product
information and store locations, visit http://www.thegoodguys.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 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.
SOURCE The Good Guys!
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http://www.thegoodguys.com
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CONTACT:
Kristen Malacarne, 214-665-1335, or pager,
888-613-2159, for The Good Guys!
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