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Egghead sales suffer

Egghead reports a 31 percent drop in August sales compared to a year ago due to sluggish sales and a reduction of its network of stores.

Egghead (EGGS) today reported a 31 percent drop in August sales compared with a year ago.

The software retailer reported sales of $24.1 million from July 28 to August 24, a substantial drop from the previous year due to sluggish sales and a reduction of its network of stores to 158 from 164.

Meanwhile, same-store sales, an industry benchmark used to gauge the health of a retailer, showed a 34 percent sales drop for stores that have been open at least a year.

"Software sales for some areas, like (education and entertainment titles) have been difficult, but Egghead's sales decline is mostly due to their own operations," said Scott McAdams, an analyst with Ragen MacKenzie in Seattle. "They've had some difficulty for the past four or five years and have been restructuring."

The company's financial woes stem from shoppers preferring superstores to Egghead's network of small stores, mail order houses which snap up business, and computer users' ability to download software from the Internet, McAdams said.

Egghead also announced that its chairman, George Orban, will now have most of the corporate functions such as distribution, store operations, and finance report directly to him. Meanwhile, Terry Strom, chief executive and president, will focus on merchandising and inventory control as the company gears up for the Christmas season.