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February 1st, 2000

[2:30 PM] CompUSA Sales Lower, Margins Higher, Losses Better
by Staff

CompUSA reported lower sales for the last quarter of 1999, the company's 2nd fiscal quarter of 2000. The company had gross sales of US$1.38 billion, down from US$1.75 billion a year ago. Despite the lower sales, the company reported a less than expected loss of US$2 million, or US$.02 per share. The consensus call for the company had been a loss of US$.05 per share.

CompUSA is the home of the Apple Store-within-a-Store. The company has already agreed to be purchased by Mexican retailer Grupo Sanborns for US$10.10 per share. The company's stock is currently trading higher at 9 3/4, higher by 1/16.

CompUSA is in the middle of a mandatory quiet period in relation to their buyout by Grupo Sanborns.

The Mac Observer Spin: CompUSA has been somewhat reticent to disclose their Apple related sales for much of the last year. Shortly after the company launched their Store-within-a-Store plan, Apple related sales increased to 14% of total sales. Since then, mum has been the word. Apple's outstanding 1st fiscal quarter (calendar 4th quarter, and the same quarter being announced by CompUSA at this time), as well as the PC Data stats that give Apple 10% of retail market share would hint that CompUSA has benefited as well.

The company has also been able to increase their gross margins during the quarter. This is a feat indeed, considering the fact that the margins on their products are razor thin and not known for increasing. According to a Reuters report:

CompUSA said gross margins in its core business, which excludes the new Internet computer sales subsidiary cozone.com, rose for the second quarter in a row. It said this was a sign that its decision last June to concentrate on more profitable products was bearing fruit.

Gross margin rose to 16.3 percent for the second quarter from 13.6 percent a year earlier.

That is an interesting choice of words considering that Apple has the highest margins in the industry. These increased margins also contributed to the company's less than expected losses.

It will be interesting to see how or whether the buyout by Grupo Sanborns will affect the company's relationship with Apple. We don't imagine that it will have a negative impact at all.

CompUSA



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