Fed: June CE Sales Were Up; Chains Say No

By Alan Wolf -- TWICE, 7/19/2010

NEW YORK — The U.S. Commerce Department reported solid sales for electronics and appliance retailers in June, but individual discount chains disagreed.

Revenue for the sector rose 7.6 percent year over year to $8.2 billion and moved up 1.3 percent from May, unadjusted for price and calendar changes.

But three discount chains that report monthly — Target, Costco and BJ’s Wholesale — all reported softness in consumer electronics and computers.

According to analysts, the Commerce Department’s monthly CE/majap sales figures are weighted toward Best Buy, which could account for discrepancies between this report and those of national discount chains which indicated weak CE sales in June.

The government data also shows that sales at CE and majap stores outpaced the retail industry overall, which posted a 3.3 percent gain over June 2009 excluding restaurants, car dealers and gas stations.

“[The] data shows consumers continue to take a cautious approach towards shopping,” said NRF president and CEO Matt Shay, president/CEO of the National Retail Federation (NRF), a retail trade association. “However, growth in key areas such as electronics, apparel and department stores is an encouraging sign as we enter the back-toschool shopping season.”

Added NRF chief economist Jack Kleinhenz: “Moderate growth these last few months proves that consumer uncertainty remains. A slow-growing economy and high unemployment rates will continue to hinder consumers’ decisions to spend on discretionary items.”

The three reporting discount chains said that in June, as the economy and unseasonably warm weather took their toll, room air, along with staples like food, apparel and health care, displaced TVs and PCs at checkout counters.

Among those reporting monthly results, Target said net sales rose 4 percent to $5.9 billion and comp-store sales increased 1.7 percent. But chairman/ CEO Gregg Steinhafel cited CE, video games, music and movies as “particularly soft” last month, and said Target will continue to plan its business “cautiously.”

Within the warehouse club channel, Costco reported a 7 percent increase in June sales, to $7.3 billion, and a 1 percent gain in U.S. comp-store sales, excluding the positive impact of higher gas prices.

Costco said its CE and majap business suffered comp-sale declines due to softness in the TV and computer categories, although the downturn was partially offset by strong room air volume. TV was down equally in dollars and units, attributable to reduced couponing activity, in a scenario Costco has seen for the past several months.

At BJ’s Wholesale Club, net revenue rose 7.9 percent to $1.1 billion and comps increased 3.2 percent excluding gasoline. Like Costco, BJ’s reported strength in room air, but slackened demand for TVs and computers, as well as pre-recorded video.