CE Sales Boost Results In June For Discounters

By Alan Wolf -- TWICE, 7/16/2007

NEW YORK — CE gift giving for graduations and Father's Day helped stabilize sales at full-line discount chains following a choppy spring, although executives warned of continuing weak fundamentals.

"Consumers continue to be challenged financially, with more pressure on discretionary spending," observed Eduardo Castro-Wright, president/CEO of Wal-Mart Stores U.S. "Gas prices have moved to be their chief concern in our latest survey and they appreciate the opportunity to save on everything."

Still, Wal-Mart reported "significant year-over-year gains" in sales of flat-panel televisions, MP3 players, video game hardware and accessories, and laptop and desktop computers last month, the latter fueled by the introduction of select Dell models.

Net sales at Wal-Mart's flagship discount stores rose 7.1 percent to $22.9 billion for the five weeks ended July 6, while same store sales edged up 1.6 percent. To maintain the momentum, Castro-Wright promised "a single-minded focus on reducing prices on specific items throughout the year," and said the world's largest retailer would work with key suppliers to lower prices, reduce packaging and trim distribution costs.

Similarly, Sears Holdings cited the soft macroeconomic environment while reporting a 4 percent decline in comp-store sales at both its Sears and Kmart chains for the nine-week period, ended July 7.

"We are disappointed with our recent performance," said CEO Aylwin Lewis. "Although we believe our business has suffered from many of the same factors that have led other retailers to announce disappointing results and lowered expectations, our recent performance underscores our ongoing need to become more relevant to consumers while improving our discipline around expense management."

At Sears stores, major appliances saw the steepest category slide, albeit up from the first quarter, while Kmart experienced declines across most product categories, the company said.

At Target, net sales rose 7.6 percent to $5.5 billion and same-store sales climbed 3.3 percent — the lower end of its planned range of 3 percent to 5 percent — for the five weeks, ended July 7. The discounter cited CE among categories with the strongest growth during the period, and music and movies among the weakest.

Among the wholesale clubs, No. 1 player Costco reported net sales of $6.4 billion for the five weeks, ended July 8, a 10 percent increase year-over-year, and a 6 percent gain in comps. The said it saw some of its strongest sales increases in TVs, computers, digital cameras and room air.

At Wal-Mart's Sam's Club division, net sales grew 9.6 percent to $4.4 billion and same-store sales increased 6.9 percent for the five weeks, ended July 6, thanks to "positive trends" in traffic and average ticket.

No. 3 warehouse club BJ's said net sales for the five weeks, ended July 7, increased by 9.8 percent to $886.8 million, and comps climbed 5.3 percent. BJ's cited TVs among its strongest categories for the month, and room air among its weakest.

Separately, Sharper Image, the proprietary CE specialty retailer, said net June sales slipped 21percent to $28.9 million while same-store sales slid 7 percent.