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Mixed CE Picture Displayed In Retail Reports

5/02/2011 12:01:00 AM Eastern
NEW YORK – National retailers Amazon.com, RadioShack, Office Depot and OfficeMax filed their quarterly reports last week, which provided a varied and mixed look at CE retailing in the first quarter.

Amazon.com had to be pleased that it reported that its worldwide electronics sales were up almost 60 percent in the first quarter. But the online retailer posted a double-digit drop in net profit.

Worldwide electronics and other general merchandise sales grew 59 percent to $5.59 billion in the quarter ended March 31.

Net income decreased 33 percent to $201 million in the first quarter compared with net income of $299 million in first quarter 2010.

Net sales increased 38 percent to $9.86 billion in the first quarter, compared with $7.13 billion in first quarter 2010.

North America segment sales, representing the company’s U.S. and Canadian sites, were $5.47 billion, up 45 percent from first quarter 2010.

RadioShack
saw profits fall 30 percent in the quarter due to its problematic T-Mobile business, a larger mix of low-margin handsets, and increased staffing costs for Target Mobile departments.

Profits were also impacted by costs associated with the pay-down of $4.1 million in debt.

Net sales and operating revenues for the three months ended March 31 increased 2.1 percent to $1 billion, and comparable store and kiosk sales slipped 0.6 percent.

Net sales were boosted by a $28.9 million increase in sales at the company’s Target Mobile centers, which grew to 887 locations from 104 during the year-ago period. RadioShack expects to operate 1,450 departments for the discount chain by the end of June.

But comp sales were impacted by a decline in the company’s T-Mobile postpaid wireless business. RadioShack previously said T-Mobile was in breach of contract, and the two sides have been holding “constructive” discussions since February.

Comps were also hurt by a year-over-year decline in sales of TVs, digital music players and digital-to-analog converter boxes and related antennas, although the decreases were partially offset by higher postpaid wireless sales for Sprint and AT&T.

RadioShack’s total mobility business increased 11 percent, and its mobile business will be further boosted this month by the rollout of a new tablet computer assortment.

Office Depot reported a net loss and slightly lower sales in its fiscal first quarter, ended March 26. The net loss, after preferred stock dividends, was $15 million compared with net earnings of $20 million in last year’s first quarter.

Sales in the first quarter were $3 billion, a decrease of 3 percent compared to the first quarter of 2010.

“Our first quarter operating results were lower than the prior year due to the impact of lower sales,” said Neil Austrian, Office Depot’s interim chairman/CEO. “However, we are encouraged by the progress we’re making throughout the enterprise to improve the future operating performance of the Company.”

First quarter 2011 sales in the North American retail division were $1.3 billion, a decrease of 2 percent compared with the same period last year. Comp store sales were down 1 percent from last year.

OfficeMax reported slower sales and weaker gross margin cut OfficeMax’s first quarter profits by more than half.

Net income was $11.4 million on net sales of $1.9 billion, a 2.8 percent decrease, for the three months ended March 26.

In a statement, CFO Bruce Besanko attributed the sales declines to weaker store traffic and lower spending by corporate customers.

Retail sales declined 1.8 percent to $937.3 million, same-store sales slipped 1.2 percent, and retail income fell 34 percent to $25.6 million, or 2.7 percent of sales.

Retail gross profit margin fell to 28.7 percent from 30.1 percent during the year-ago quarter due to increased promotional activity, an unfavorable sales mix within CE, and deleveraging of fixed expenses, the company said.

Recently appointed president/CEO Ravi Saligram promised “significant” cost-cutting to bring expenses in line with last year. “We believe these actions should help drive improved performance,” he said. – Reported by Alan Wolf and Steve Smith
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