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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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