Financial Reports: Guitar Center, Zones,

1Q Sales Up at Musician’s Friend

First-quarter net sales for Guitar Center (Nasdaq: GTRC) rose 13%, to $287.5 million for the three months ended March 31. Net income for the Westlake Village, CA-based cataloger/retailer increased 53%, to $5.3 million from $3.4 million a year ago.

Net sales for the company’s Musician’s Friend catalog increased 22%, to $59.9 million from $49.3 million last year. Gross margin for the direct response division was 31.0%, up from 27.7% in the first quarter of 2002. The increase is primarily due to a shift in its product mix toward higher-margin products and improved efficiencies due to marry-up software installed at the Musician’s Friend fulfillment center last year. Selling, general, and administrative expenses for the direct response division were 22.7% for the quarter, compared with 23.4% a year ago. The company credits the improvement to increased operational efficiencies at its call center and fulfillment center.

Zones Posts Loss Computer reseller Zones (Nasdaq: ZONS) slipped into the red for the three-month period ended March 31. The Renton, WA-based marketer posted a net loss of $646,000 for the first quarter, compared with net income of $81,000 for the first quarter of last year. Net sales were down slightly to $98.6 million from $99.8 million last year. Narrows Loss Internet behemoth (Nasdaq: AMZN) narrowed its first-quarter net loss to $10.1 million from $23.2 million last year.

Net sales for the Seattle-based company increased 28%, to $1.1 billion from $847.4 million. The company attributes the gains to a free-shipping offer and international sales. This marks the first time that Amazon passed the $1 billion mark in a nonholiday quarter.

In a statement, Amazon said it expects second-quarter sales of $1 billion-$1.05 billion, up 24%-30% from last year. It expects second-quarter operating income of $45 million-$60 million.

For the full year, Amazon said it expects sales to grow more than 19%, to $4.7 billion, and operating income to grow more than 50%, to $275 million. Previously the company had expected sales to grow at least 15% and had estimated operating income at about $225 million.

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