Audiovox Says It Left Low-Margin Black Friday Sales On Table
Audiovox left some Black Friday business on the table, sacrificing revenue for profit in its Q3 ended Nov. 30, senior executives said Tuesday on an earnings call. Net sales in the quarter fell 20.4 percent to $155.66 million. For the first nine months of the year, they dropped 17.9 percent to $400.35 million.
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But the company swung to a $15.9 million net profit for the nine months, from a year-earlier loss, and doubled its Q3 net profit to $12.6 million. “We entered Q3 knowing that sales would be lighter as most major retailers curtailed buying across the board in anticipation of a slower holiday selling season,” CEO Patrick Lavelle said. Retailers wanted to avoid getting stuck with inventory as they had the previous year, a problem that took almost six months for some of them to work through, he said.
Holiday sales at retail were “a little better than expected, though … expectations were not very high,” Lavelle said. “More important is that our customers are reporting clean inventory positions and as a result, we do not expect a repeat of last year’s inventory overhang. This should help keep us on track to deliver new products when we have them planned and not have to wait until retailers can take them.”
Audiovox “chose not to participate in a number of Black Friday promotions” for MP3 and portable DVD players “due to insufficient margins and a limited risk-reward scenario,” Lavelle said. “There were also a number of product lines sold last year that are no longer a part of our mix, and finally, we knew that we would not see a substantial improvement in car sales. … I believe we followed the right course with careful inventory management, the effects of which will really be seen in our fourth quarter and into next fiscal year.”
Audiovox had “good” Q3 sales of digital camcorders and clock radios, “and we did pick up literally a few days of sales” of the new FLO TV handheld that shipped to Amazon, Best Buy and RadioShack, Lavelle said. Audiovox is the exclusive FLO TV supplier for in-vehicle systems. It also “recently concluded arrangements to handle the portable business as well,” so “we expect FLO TV to have a positive impact on our sales in 4Q and beyond,” he said. Sales for Audiovox’s automotive business were up in Q3, “despite continued overall weakness driven by the slow recovery of the car market,” Lavelle said. The company’s exclusive arrangement to supply all Sirius XM products for the aftermarket “has enabled us to double our sales in this category,” he said.