Reports Progress on Business Strategy for Returning to Profitability
SAN FRANCISCO, Nov. 18 /PRNewswire/ -- Good Guys (Nasdaq: GGUY) today
announced financial results for fiscal 1999, which ended September 30.
The company reported a net loss of $39.3 million, or $2.54 per share, for
the year, compared with a net loss of $8.9 million, or $.64 per share, for
fiscal 1998. The loss in fiscal 1999 includes a one-time charge of
$9.3 million, or $.60 per share, primarily related to personnel reduction and
inventory write-offs. Excluding the one-time charge, the company would have
reported a net loss of $30 million, or $1.94 per share.
As previously reported, sales for fiscal 1999 were $915.5 million, a
1 percent decrease from $928.5 million for fiscal 1998. Comparable store sales
for continuing categories for the year increased 1 percent. Overall, same
store sales declined 4 percent.
For the fourth quarter, Good Guys reported a net loss of $25.6 million, or
$1.42 per share, compared to a net loss of $6.8 million, or $.47 per share,
during the fourth quarter of 1998. Excluding the one-time charge, the company
would have recorded a net loss of $16.3 million, or $.90 for the fourth
quarter.
As previously reported, fourth quarter sales were $191.9 million, down
approximately 13 percent from $220.1 million in the fourth quarter of fiscal
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.
"Results for the quarter were within expectations given the steps we have
taken in restructuring the company and the fact that we are in the early
stages of implementing our strategy to return the company to profitability,"
said Ronald A. Unkefer, founder, chairman and chief executive officer of Good
Guys, who rejoined the company on July 1 to lead a turnaround. "Our
restructuring initiatives allowed us to quickly liquidate our entire personal
computer and home office inventories and expand our offering of higher-margin
consumer entertainment electronics. While this discontinuation negatively
impacted fourth-quarter sales, we are now repositioned to be the industry's
entertainment electronics specialist offering an excellent selection of more
fully featured models and higher-end brands in time for the holiday shopping
season."
Progress Towards Profitability
By reducing overhead and streamlining operations, Good Guys has
significantly reduced general and administrative costs. In the current fiscal
year, which began October 1, G&A and other reductions are expected to top
$15 million. In addition, the company has swiftly sharpened its focus to
target middle-to-upper income customers, primarily males between the ages of
30 and 50.
"We've made tremendous progress in taking the steps necessary to return
the company to profitability and to reposition Good Guys as the premier
provider of leading-edge consumer entertainment electronics," said Unkefer.
"In just a few months, we have transformed the company to capitalize on the
growing demand for digital and Internet-related consumer products. Our shelves
are bursting with the latest high-tech offerings that appeal to early adopters
and technology-savvy customers."
New Initiatives to Augment Product Offerings
As part of Good Guys' ongoing transformation, Unkefer announced three new
initiatives to continue enhancing the company's product offerings:
-- Good Guys recently formed a new in-store category featuring
Internet-related products and services dedicated to quickly and easily
connecting people to each other and the Internet. Product offerings will
include digital cable set top boxes, personal digital assistants, wireless
phones, Internet appliances, broadband and narrowband services and related
products. In October, Good Guys became the nation's first specialty retailer
to offer Excite@Home's high-speed cable Internet service, and also premiered
InfoGear's iPhone Internet screen phone. In addition, Good Guys is the first
retailer in the country to offer the MailStation from CIDCO, a simple plug and
play email access device which allows users to send and receive email without
a PC.
-- The company also announced an enhanced mobile electronics department.
The division is dedicated to offering the latest advancements in mobile
technology and introducing new product offerings from some of the world's
leading manufacturers, including Sony ES, Polk Audio, Alpine and Boston
Acoustics. In October, Good Guys became the first retailer in the nation to
offer Alpine's mobile DVD Navigation System, and will host the national
premier of several other innovative mobile electronics offerings in the coming
months. The company has named mobile electronics specialist Sandy Lirag to
lead the division, and a new in-store management structure is being put in
place to expand mobile electronics sales and custom installations at all
79 locations.
-- Good Guys has embarked on an initiative to further differentiate its
product offerings from the large national TV/appliance/computer chains.
Currently, more than half of the products offered by Good Guys are not
available at the two largest chains, Circuit City and Best Buy. The company is
in negotiations with many of the world's leading manufacturers for products
that are expected to increase this differentiation to 75 percent or more, most
of which will be expanded offerings of more fully featured models and
exclusive high-end brands. Signaling the start of this initiative, Good Guys
began offering Nakamichi's premier line of SoundSpace home audio systems in
November, and is planning additional announcements over the next several
months.
To drive store traffic during the holiday shopping season, the company
recently introduced a new branding and marketing campaign targeted at
customers who are passionate about electronics. Featuring a new logo and the
tagline "It doesn't get any gooder," the integrated campaign includes an
expanded newspaper schedule, television and radio advertising and targeted
direct mail.
"Good Guys has dedicated the last four and a half months to restructuring
our organization, retraining the sales team and revamping our advertising and
marketing in an effort to capitalize on the holiday shopping season," said
Unkefer. "While there is still work to be done, Good Guys is a stronger
company today and is now well-positioned to be the leading specialist in the
exploding entertainment electronics industry."
Good Guys is the country's largest 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.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 those relating to the Company's ability to implement its 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.
The Good Guys, Inc.
SELECTED FINANCIAL DATA
(Unaudited)
Quarter Ended September 30: 1999 1998
Sales $191,858,000 $220,068,000
Net Loss $(25,588,000) $(6,751,000)
Net Loss Per Share
Basic $(1.42) $(0.47)
Diluted $(1.42) $(0.47)
Average Shares
Basic 18,048,000 14,248,000
Diluted 18,048,000 14,248,000
Twelve Months Ended
September 30: 1999 1998
Sales $915,508,000 $928,490,000
Net Loss $(39,313,000) $(8,933,000)
Net Loss Per Share
Basic $(2.54) $(0.64)
Diluted $(2.54) $(0.64)
Average Shares
Basic 15,484,000 14,012,000
Diluted 15,484,000 14,012,000
The Good Guys, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands Three Months Ended
except per share data)
September 30, 1999 September 30, 1998
% of % of
Amount Sales Amount Sales
Net sales $191,858 100.0 $220,068 100.0
Cost of sales 147,019 76.6 168,954 76.8
Gross profit 44,839 23.4 51,114 23.2
Selling, general and
administrative
expenses 68,149 35.5 61,242 27.8
Income (loss)
from operations (23,310) (12.1) (10,128) (4.6)
Interest expense, net 2,278 (1.2) 531 (0.2)
Income (loss) before
income taxes (25,588) (13.3) (10,659) (4.8)
Income tax expense
(benefit) 0 0.0 (3,908) (1.8)
Net income (loss) $(25,588) (13.3) $(6,751) (3.1)
Net income (loss)
per common share
Basic and Diluted: $(1.42) $(0.47)
Weighted average
shares
Basic and Diluted: 18,048 14,248
The Good Guys, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands Twelve Months Ended
except per share data)
September 30, 1999 September 30, 1998
% of % of
Amount Sales Amount Sales
Net sales $915,508 100.0 $928,490 100.0
Cost of sales 692,636 75.7 700,158 75.4
Gross profit 222,872 24.3 228,332 24.6
Selling, general and
administrative
expenses 257,448 28.1 241,155 26.0
Income (loss)
from operations (34,576) (3.8) (12,823) (1.4)
Interest expense, net 4,737 (0.5) 1,277 (0.1)
Income (loss) before
income taxes (39,313) (4.3) (14,100) (1.5)
Income tax expense
(benefit) 0 0.0 (5,167) (0.6)
Net income (loss) $(39,313) (4.3) $(8,933) (1.0)
Net income (loss)
per common share
Basic and Diluted: $(2.54) $(0.64)
Weighted average shares
Basic and Diluted: 15,484 14,012
The Good Guys, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
September 30,
(Amounts in thousands) 1999 1998
ASSETS
Current assets:
Cash $2,556 $3,051
Receivables, net 19,021 26,653
Inventories 110,276 135,072
Prepaid Assets 6,637 6,445
Total current assets 138,490 171,221
Property and equipment, net 79,954 72,216
Other assets 7,110 7,421
Total Assets $225,554 $250,858
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $36,571 $96,517
Accrued expenses 36,599 42,334
Total current liabilities 73,170 138,851
Revolving credit debt 56,504 --
Shareholders' equity 95,880 112,007
Total Liabilities and
Shareholders' Equity $225,554 $250,858
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, 214-665-1335,
or Pager, 888-613-2159
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