Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Egghead Loss Reaches $3.6 Million Reorganization Costs Hurt Software Firm’s Bottom Line

Michael Murphey Staff writer

FOR THE RECORD (July 26, 1997): Wrong name, numbers: In a Friday story about Egghead Inc.’s first quarter earnings, the title of an incoming Egghead board member and the amount of earnings per share for the first quarter of fiscal year 1996 were incorrectly stated. Incoming board member Greg Boudreau is currently chief executive officer of Surplus Direct rather than Egghead, and the company’s losses in the first quarter of fiscal 1996 were 3 cents per share rather than 43 cents per share.

Egghead Software’s losses deepened during the first quarter of its fiscal year as the Spokane-based computer software and hardware retailer continues to cope with its reorganization efforts.

Egghead lost $3.66 million, or 21 cents per share, on sales of $56 million during the quarter ended June 28. That compares with a loss of $547,000, or 43 cents per share, on sales of $78.6 million during the same period a year ago.

The company said the current year’s revenue figures reflect the previously-announced fourth-quarter closure of 70 stores “which contributed to a reduction in the average number of stores open during the period to 86 vs. 162 during the first fiscal quarter of 1996.”

Comparable store sales for the 86 stores were up 1.3 percent during the first quarter of 1997 compared with the first quarter of 1996.

Egghead has been in one sort of transition or another for several years now. The company moved its corporate headquarters to Spokane in a money-savings effort in 1995. The company took a big hit in its bottom line to absorb the costs of the move, and suffered a major disruption to its Corporate, Government and Education (CGE) Division’s customer base in the process.

In 1996, rather than incur the expense and efforts of rebuilding the CGE division, it sold the division to rival Software Spectrum. Prior to its Spokane move, the CGE division had accounted for a significant portion of Egghead’s revenues.

During that same year, the company experimented with shifts in its retail formats, producing mixed results.

Then at the end of the year, George Orban, Egghead’s board chairman, took over management of the company, restructured Egghead’s management team, and closed more than 75 of its retail outlets.

“We achieved our plan which called for a significant reduction in operating losses,” Orban said in a news release Thursday that announced Egghead’s first-quarter results.

“We were able to do this by beating our expense plan and significantly broadening our merchandise offer,” he said.

The company is now in the process of a merger with Surplus Direct.

Orban announced Thursday that Steven E. Lebow and Linda Fayne Levinson have resigned from the board of directors. They will be replaced by Greg Boudreau, Egghead’s chief executive officer, and Jon Brodeur, president of Surplus Direct. , DataTimes