August Sales Up, But Comps Weak; Costco Talks CE
By Steve Smith -- TWICE, 9/4/2006
NEW YORK — While mass merchants reported higher sales during August but lower single-digit comp-store sales gains some of Costco's conference call centered on consumer electronics.
Costco revealed that it has tested TV installation in the past month, in reaction to consumer requests and the higher returns in CE.
Richard Galanti, chief financial officer, acknowledged what CEO James Sinegal commented on during the call, that Costco has “a great return policy” and that “some abuse the privilege.” Galanti said that with the complexity of installing any type of HDTV “the picture doesn't look as good as it does in our stores. We are trying more [consumer] education” as well as a test of this new program, of which no details were available.
Costco also reported that consumer electronics margins have been reduced due to returns and that comp sales for its “majors” category which is mostly CE ranged from 20 to 40 percent higher month to month last year. Now it is in the mid- to high-single digits.
Galanti commented, “How many more big screens can people buy?” Still he said that Costco was not shocked by HDTVs that were $4,000 last year now down to $2,500 or so.
Overall the warehouse club reported a 5 percent comp-store sales gain, 2 percent lower than last August, with net sales of $4.55 billion, an 11 percent gain from the $4.08 billion for the same time last year.
Wal-Mart Stores reported 2.5 percent sales gain in comp store sales vs. last August when the gain was 2.9 percent. Sam's Club had a 3.4 percent sales gain in comp store sales while the previous August it was a 3.7 percent gain. Combined in the U.S. for both chains the comp store gain was 2.7 percent versus last August's 3.1 percent. Wal-Mart Stores reported August sales of $16.9 billion, an 8.1 percent sales gain, while Sam's Club had sales of $3.13 billion, up 4.1 percent vs. the same time last year.
Target had a comp store sales of 2.8 percent, lower than last August's 6.3 percent. Sales for the month were $4.22 billion vs. $3.86 billion during the same time last year.
BJ's Wholesale Club reported a comp sales gain in August of 2.3 percent vs. last year's 5.6 percent, but a sales gain of 4.4 percent to $624.7 million from $598.3 million in August of 2005. Comp sales increated in all major regions with the highest in the upstate New York and metro New York region.
And Sharper Image reported another month of lower sales in August at $32.5 million, 13 percent lower than last year's $37.5 million. Total store sales were $19 million compared to $23.8 million in the prior August, a decrease of 20 percent. Comp store sales in August decreased 22 percent. Total catalog sales/direct marketing sales (including wholesale) were $8.5 million compared to last August's $8.1 million, an increase of five percent. Internet sales were $5 million compared to last August's $5.6 million, a decrease of 10 percent.
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