LYNDHURST, N.J., Nov. 23, 2005 (PRIMEZONE) -- Harvey Electronics, Inc. (Nasdaq:HRVE) ("Harvey Electronics") ("Harvey" or the "Company") announced sales results for the year and fourth quarter ended October 29, 2005.
For the year ended October 29, 2005, net sales aggregated $40.4 million, a decrease of approximately $2.7 million or 6.3% from the prior year. Comparable store sales for fiscal 2005 decreased approximately $3.5 million or 8% from the prior year.
For the fourth quarter of fiscal 2005, net sales aggregated $9.6 million, a decrease of approximately $749,000 or 7.2% from the same quarter last year. Comparable store sales for the fourth quarter of fiscal 2005 decreased approximately $1.3 million or 12.6% from the same quarter last year.
Franklin Karp, Chief Executive Officer and President of Harvey Electronics stated, "While we are disappointed with our overall sales results for fiscal 2005, we are encouraged by the continued growth of our custom installation business. Fiscal 2005 was negatively impacted by a decline in retail store traffic and additionally, from reduced overall video sales. The Company's video business declined approximately 15% as a result of reduced CRT, DLP and DVD sales, as well as price compression, competition, key vendor product shortages and a 1% decline in flat panel unit sales.
"We believe the slowdown was due to a deceleration of consumer spending as well as consumer fears that flat panel television prices would continue to significantly decline, thus delaying the purchase decision. Additionally, consumers' uncertainties and confusion regarding current technologies continue to be problematic for the industry. Harvey must do a better job informing customers about these new technologies and how they can benefit and enhance their lives as well as the family's home theater experience."
Mr. Karp continued, "The Company has experienced flat panel growth in larger size plasma and LCD televisions while reporting declines in smaller screen sizes. Sales of larger screen flat panels have and should continue to provide installation opportunities for the Company. We do expect acceleration in flat panel unit sales in fiscal 2006 as sales prices have declined substantially. Furthermore, we do not expect to experience additional significant price compression on these larger flat panel televisions in fiscal 2006.
"While the Company has experienced a decline in retail store traffic, its higher margin custom installation business has increased for the year as well as the fourth quarter, both in overall sales dollars and as a percentage of net sales. Custom installation projects continue to increase and accounted for 64% of net sales in fiscal 2005 as compared to 59% in fiscal 2004. As a result of our strong custom installation business, inclusive of a 17% increase in labor sales, coupled with the strong attachment of higher margin accessory sales, the Company's gross profit margin is expected to improve for both fiscal 2005 and the fourth quarter of fiscal 2005, as compared to the same periods last year.
"The Company continued its cost reduction program in the fourth quarter of fiscal 2005. Additionally, in this quarter, we engaged our new advertising agency, Avrett Free Ginsberg. Our new campaign has recently begun and we are very excited about this endeavor and its expected sales benefits to the Company. In fiscal 2006, a priority of the Company will be to more effectively market our brand and our service offerings while promoting home theater demonstrations, sales and installations, thus differentiating us from the mass merchants.
"Preliminary sales results for our new Harvey store in Bridgewater, New Jersey have been 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 fourth quarter and fiscal year 2005. Management has been proactive in reducing payroll and other costs where appropriate, while cultivating our service offerings and reinvigorating our marketing campaign. We remain optimistic about the new fiscal year."
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", seven 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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