Weak December Sales For Discount Chains
by Alan Wolf -- TWICE, 1/11/2008
New York — The holiday period proved problematic for the nation’s largest discount chains, which reported tepid sales for December.
Wal-Mart said net sales at its flagship discount stores rose 5.6 percent to $29.7 billion and comp-store sales rose 2.6 percent for the five weeks ending Jan. 4, driven in part by across-the-board strength in CE. “In a difficult retail environment, we were pleased with our comparable store sales during this period,” said Eduardo Castro-Wright, president/CEO of Wal-Mart Stores U.S. “Our price leadership position was clear very early in the holiday season, and customers responded throughout the period to our pricing and merchandise offerings, which were supported by well-integrated advertising and in-store communications. Customers were also pleased with the improvements they saw through our faster, friendlier check-outs, as well as their overall in-store experiences. Our stores were well-merchandised and did a good job managing inventory throughout the Christmas season.”
At Target, slower traffic led to flat net sales of $9.2 billion and a slight 0.6 percent decline in calendar-adjusted same-store sales. Bob Ulrich, who announced his retirement as CEO, effective May 1, said sales were in line with mid-month projections, and would likely lead to a decline in fourth-quarter earnings. Ulrich, who turns 65 in April, will stay on as chairman through the end of fiscal 2008 and will be succeeded as CEO by Target president Gregg Steinhafel.
Within the wholesale club channel, Costco said net sales rose 10 percent companywide to $7.6 billion for the five week, ended Jan. 6, while U.S. comp sales rose 4 percent excluding the effect of recent gasoline price hikes. The company reported strength in its “majors” category, which includes CE, A/V, PCs and majaps, and said the sector was led by high single-digit comp gains in TV and a 20 percent increase in camera and camcorder sales year-over-year.
At Wal-Mart’s Sam’s Club division, net sales rose 4.3 percent to $4.9 billion for the five weeks ending Jan. 5 and same-store sales increased 1.3 percent excluding sales of gasoline. Sam’s Club cited music and video games among its stronger holiday categories and said that “momentum built” in CE sales as the five-week period progressed.
At BJ’s Wholesale Club, net sales for December increased 6.2 percent to $1 billion and comp sales rose 3 percent, including sales of gasoline. The company said CE, music and prerecorded video were among categories with the steepest sales declines.
Elsewhere, Ritz Interactive, the e-commerce platform that includes RitzCamera.com and WolfCamera.com, as well as boating and other online-shopping sites, reported a 22-percent spike in product sales for the fourth quarter and full-year gains of 12 percent to $111 million in 2007. President/CEO Fred Lerner said a Pay-Pal holiday promotion offering customers 10 percent off at check-out helped boost sales almost 20 percent, and that the company’s photography sites benefited as customers upgraded their entry-level point and shoot digital cameras to new, more sophisticated digital SLRs. Ritz also received a lift from its continued expansion into CE and home office, Lerner said.
Sharper Image said net December sales slipped 17 percent to $97.2 million and comp sales fell 10 percent. “This holiday was a big test for our new management team and strategy,” said CEO Steven Lightman. “Despite a highly competitive and promotional environment, we were pleased with our new product performance results in digital picture frames, portable navigation products, robotic toys and games, and wireless accessories. Heading into 2008, we have the team in place to continue to execute on our multichannel strategy, with an ever-increasing amount of new quality, exciting and innovative merchandise.”
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