The soaring popularity of video games and video cassettes contributed to record sales by Schwartz Brothers Inc., owner of the Harmony Hut chain, during the year ended Jan. 31.

Sales increased 27 percent, to $45.4 million, from $35.6 million in fiscal 1981. Profits were $197,248 (25 cents) compared with $2,205 (negligible) in the year before. The figures include a fourth-quarter writeoff of $354,166 because of a supplier that filed for bankruptcy.

Fourth-quarter profits were $186,341 (24 cents) on sales of $14.2 million, compared with $436,158 (54) on sales of $13.4 million in the same period last year. Included in the year-ago figures is a $22,953 tax credit.

Lanham-based Schwartz distributes video merchandise through SBI Video, created in 1980 to get Schwartz into that market.

Wards Co. Inc., a retailer of major appliances based in Richmond, posted gains in sales and earnings for the fourth quarter and the fiscal year ended Feb. 28.

Profits for the year rose to $1.9 million ($1.03) from $2.7 million the year before. Sales increased to $176.2 million from $131.9 million. For the latest quarter, earnings were $1.3 million (64 cents) on sales of $58.1 million, compared with profits of $1.03 million (64 cents) on sales of $41.4 million in 1981.

Wards' fourth-quarter profits increased 24 percent over its previous quarter, reversing a downward trend, the company said. The firm operates Circuit City and Lafayette stores.