This will be interesting on how it will affect boxmakers today:
Wednesday April 1, 7:47 am Eastern Time
Company Press Release
SOURCE: CompUSA Inc.
CompUSA Inc. Reports Sales for the Third Quarter of
Fiscal 1998
DALLAS, April 1 /PRNewswire/ -- CompUSA Inc. (NYSE: CPU - news), America's Largest
Computer Superstore(R) retailer, today announced sales for the third quarter of fiscal 1998,
ended March 28, 1998. Net sales for the third quarter increased 14% to $1.45 billion from $1.27
billion for the comparable period ended March 29, 1997. Comparable store sales were up 1.2%
in the third quarter of fiscal 1998 for the 122 stores open one year or more.
For the first nine months of fiscal 1998, net sales were up 18% to $4.10 billion from $3.46 billion
for the first nine months of fiscal 1997. Comparable store sales were up 5.2% for the first nine
months of fiscal 1998 for the 122 stores open one year or more.
''While CompUSA achieved record third quarter sales, with a 14% increase, we are generally
disappointed with our overall sales growth,'' said James F. Halpin, president and chief executive
officer. ''Despite increased unit volume in the third quarter, sales were impacted by greater than
anticipated declines in average selling prices. On a positive note, training and technical services
achieved record sales in the third quarter, reinforcing our commitment to our 'total solutions
provider' strategy.''
Mr. Halpin further commented, ''We are now carefully examining each area of our business and
will maintain a cautious outlook over the next few quarters. In the long term, we remain confident
in the strength of our diverse operating model.''
The Company noted that sales per superstore declined approximately 6% from the comparable
fiscal quarter in the prior year which -- in combination with the Company's investments in its
businesses -- is expected to have a negative impact on its gross margin and on operating and
general and administrative expenses for the third quarter. In particular, gross margin is expected to
be approximately 14.1%. It is expected that this reduction in gross margin will be primarily
attributable to lower product margins, its investment in CompUSA PC(TM) -- its build-to-order
line of personal computers -- and deleveraging of occupancy costs (which are generally fixed).
The Company also expects net advertising expense to increase as a percentage of sales in the third
quarter due to the lower rate of sales growth experienced in the quarter.
The Company added that although sales were less than planned, it continues to invest in its
businesses to advance its ''total solutions provider'' strategy. In addition to CompUSA PC, some
of the Company's current business initiatives include business centers, call center expansion,
electronic commerce, small store concept, and distribution and configuration center expansion.
Also, the Company continues to refine its operating strategies at CompUSA Direct -- the
Company's mail order division. The Company noted that costs related to certain of these initiatives
and operations have been higher than anticipated. These higher costs are expected to negatively
impact earnings per share in the range of $0.03-$0.04 for the quarter. The Company currently
believes that the higher costs associated with these initiatives and operations are likely to continue
for the next several quarters.
The Company noted that its inventory levels have not been adversely affected by its lower than
expected sales growth in the third quarter.
The Company plans to announce earnings for the third fiscal quarter ended March 28, 1998 on
April 29, 1998.
Regarding its fiscal fourth quarter ending June 27, 1998, the Company noted that it will remain
cautious as to business conditions and is currently planning for a 0% comparable same store sales
increase. Typically, sales per store and total sales for the fourth quarter are lower than the third
quarter. As a result of these factors, the Company currently expects operating and general and
administrative expenses to deleverage. Consistent with the discussion above regarding the third
quarter, net advertising expense is expected to increase as a percentage of sales due to the lower
rate of sales growth expected for the fourth quarter. In addition, the Company currently expects its
gross margin for the fourth quarter to be lower than the 14.8% gross margin achieved in the
comparable fiscal quarter in the prior year, but to be no lower than the currently anticipated third
quarter gross margin.
CompUSA is one of the nation's leading retailers and resellers of personal computers and related
products and services. The Company currently operates 150 Computer Superstores (SM) in 68
major metropolitan markets across the United States which serve retail, corporate, government
and education customers and include technical service departments and classroom training
facilities. CompUSA also offers its own build-to-order line of personal computers, the CompUSA
PC, and operates an Internet web site located at www.compusa.com.
This press release contains forward-looking statements about the business, financial condition, and
prospects of the Company. The actual results of the Company could differ materially from those
indicated by the forward-looking statements because of various risks and uncertainties, including
without limitation, changes in product demand, the availability of products, changes in competition,
economic conditions, various inventory risks due to changes in market conditions and other risks
indicated in the Company's Securities and Exchange Commission filings and reports. All of the
foregoing risks and uncertainties are beyond the ability of the Company to control, and in many
cases the Company cannot predict the risks and uncertainties that could cause its actual results to
differ materially from those indicated by the forward- looking statements. When used in this press
release, the words ''believes,'' ''plans,'' ''expects,'' and ''anticipates'' and similar expressions as
they relate to the Company or its management are intended to identify forward-looking statements.
SOURCE: CompUSA Inc.
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Compusa Inc (NYSE:CPU - news)
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