Profit Falls at Tweeter

Consumer electronics company Tweeter ( TWTR) stumbled to a wider third-quarter loss Tuesday, matching analysts' expectations, on a slight drop in revenue.

The company lost $6.1 million, or 25 cents a share, in the quarter ended June 30, compared to a loss of $4.1 million, or 17 cents a share, in the year-earlier period. Sales declined 1% to $169 million from $170 million a year ago.

Gross margin increased 20 basis points in the quarter, while selling expenses expanded 80 basis points. Corporate expenses jumped 170 basis points, the company said, citing an increase in compensation expense from building its in-home installation service.

Tweeter noted that third-quarter comparisons relating to cost of sales and selling expenses are before the quarterly effect of a reclassification of $8.5 million in June 2004 and $5.7 million in June 2003. That distorts the comparability of the two quarters, it said, but the distortion should be corrected by the December 2005 period.

The Canton, Mass.-based company repeated nearly the exact comments it made in its April third-quarter earnings report, saying it is happy with the progress made so far on supply chain and inventory management systems. Inventory on hand decreased to 95 days in the latest quarter from 107 days last year with net inventory at $114 million at quarter end, compared to $133 million a year ago.

Year-to-date same-store sales are up 2%, the company said, and it expects fourth-quarter same-store sales to be flat to up 2%.

However, Tweeter said it will discontinue providing earnings-per-share guidance due to its recent difficulty in accurately predicting sales.

For the fourth quarter, analysts are expecting a loss of 14 cents a share. That would compare to a loss of 43 cents a share in the year-earlier fourth quarter.

Shares of the company, which has struggled against rivals Best Buy ( BBY) and Circuit City ( CC), were down 7.5% to $4.80 on the Nasdaq, not far from their 52-week intraday low of $4.55 reached on July 19. The stock is down about one-third from last year.

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