Appliance Recycling Centers of America, Inc. (ARCA), a retailer of special-buy appliances such as close-outs, factory overruns, and scratch-and-dent units, reported revenues of U.S. $10.7 million for the second quarter of 2003 ended June 28, down from $11.7 million in the year-earlier period. The company also reported a net loss of $475,000 or $0.20 per diluted share, compared to earnings of $537,000 or $0.16 per diluted share in the second quarter of 2002.
For the first 6 months of 2003, revenues totaled $20.7 million compared to $23.4 million in the same period of 2002. ARCA's first half net loss came to $1.3 million or $0.55 per diluted share, compared to earnings of $775,000 or $0.23 per diluted share last year.
Second quarter same-store sales of the seven ApplianceSmart factory outlets that were open during the complete second quarters of 2003 and 2002 were up 27 percent. Total retail sales increased 18 percent for the quarter, driven in part by a strong contribution from the Champlin, MN, U.S., outlet that opened in this year's first quarter. The Champlin factory outlet, designed as a warehouse environment in an excellent, high-traffic location, has performed exceptionally well since its opening.
The strong continued growth of the ApplianceSmart operation did not offset the anticipated drop in appliance recycling revenues. Total recycling revenues decreased by 51 percent for the second quarter of 2003, compared to the same period in 2002. In last year's second quarter, recycling revenues were generated by two California energy conservation programs, one of which was started in response to the energy crisis affecting California in 2001. With the passing of California's energy crisis, only an ongoing statewide program is now operating, which is being conducted under an extension of the 2002 program pending final action by Southern California Edison on the 2003 program, the company said. As a result, ARCA said its recycling volumes declined significantly during this year's first half in comparison to the first six months of 2002.
Edward R. (Jack) Cameron, president and CEO, commented: "We are extremely encouraged by ApplianceSmart's strong ongoing performance. Attained amid sluggish economic conditions, the strength of our retail sales is lending further credence to the validity of ApplianceSmart's special-buy retail concept. As previously reported, we completed the restructuring of ApplianceSmart's Ohio business by closing our two outlets in the underperforming Dayton market and by strengthening the management and systems of our Columbus operations. We are now starting to see the initial positive results from these actions. Having successfully dealt with this issue, we are now evaluating locations for our next ApplianceSmart factory outlet."
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