MBI Business Centers, a Rockville-based computer retailer that is striving to find new investors, announced yesterday that it incurred a loss of $2.7 million as sales dropped 21 percent for the three months ended April 30.
The company said it lost 56 cents per share on sales of $22.8 million, compared with profits of $588,000 (21 cents) on sales of $29 million for the same period the previous year.
Ronald R. Watkins, the firm's new chief executive, said he was "disappointed with the results" but added that "it was not unexpected."
Watkins said the company is scrambling to find additional sources of capital and hopes to find an outside investor. The company also hopes to sell some of its less productive locations to reduce the number of outlets from 32 to 20. This would come on the heels of a major reorganization that resulted in the closing of a third of the MBI retail outlets in March.
Watkins also predicted that the firm will raise several million dollars through an auction to liquidate some slow-moving inventory. The auction, which will be held Monday and Tuesday, will be conducted by Ross-Dove Co., an auction firm that has handled auctions for a number of computer companies, according to Watkins.
The company is in technical default on loan agreements with its principal bank. The company said it obtained a waiver through June 15 and is renegotiating its line of credit and two notes with the bank.
MBI sales were hurt by a number of factors, particularly inventory problems and the suspension of a major federal contract, according to the company.
In January, MBI began negotiating with its suppliers to extend payment terms because of a shortage of capital. The negotiations resulted in delays in receiving merchandise, which Watkins said hurt sales and forced salesmen to spend too much time managing backlogs. Commercial sales declined $3.9 million.
In addition, MBI was hurt by the suspension in September of a federal contract to operate three discount computer stores for government agencies. The contract was reawarded in February, but it has taken time to reestablish demand. Sales to the federal government were $2.4 million lower last quarter than the same period in 1986.
Expenses also rose by $1.3 million, or 20 percent, and interest expenses grew from $164,000 to $552,000 because of the increase in borrowing under the company's line of credit and an increase in long-term debts.