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Retailer Report Varied Q3 Performances

11/07/2011 12:01:00 AM Eastern
NEW YORK – Amazon.com’s retail, hardware and content investments, and a carrier transition at RadioShack, were but some of the changes that altered quarterly financial reports for CE-related retailers, while expanding hhgregg scored a double- digit profit.

That’s just a few of the highlights of publicly held retailers’ financials released recently.

Amazon.com said third-quarter profits fell 73 percent to $63 million and projected as much as a 142 percent decline in fourth-quarter operating income as the e-tailer ramps up investments in infrastructure and capacity, the launch of four Kindle models and its digital content business.

Third-quarter net sales rose 44 percent to $10.9 billion, while net sales in North America rose 44 percent to $5.9 billion and operating income fell 23 percent to $144 million for the three months, ended Sept. 30. Sales of electronics and other general merchandise rose 56 percent in North America to $3.6 billion, and sales of media increased 21 percent to $1.9 billion.

hhgregg reported higher sales and lower relative costs, which helped drive a 53.8 percent increase in second-quarter net income, to $6 million.

Net sales for the three months, ended Sept. 30, rose 28.6 percent to $618.6 million due to the net addition of 35 new stores over the trailing 12 months, while comp-store sales edged up 1.5 percent on strength in major appliances and computers which were partially offset by declines in video.

President/CEO Dennis May said the solid results show strategic initiatives, including a new e-commerce site, the rollout of tablets, an added emphasis on majaps and continued new store expansion, began to gain traction in the quarter.

Looking ahead, hhgregg said it is on track to open a total of 35 new stores during its current fiscal year which ends in March 2012, and plans to add 20 to 25 more stores over the following 12 months.

Office Depot’s third quarter in its North American retail division recorded net sales of $1.2 billion, down 4 percent, reflecting the closing of Canada stores, and comp-store sales decreased 2 percent due to weakness in computers and related products. Comp sales were strongest in tech support and office supplies. North American operating profit rose 40 percent to $42 million thanks to gross margin improvements from a higher sales mix of supplies vs. CE products, as well as better management of pricing and promotions and lower property costs.

OfficeMax reported lower retail segment sales in its fiscal third quarter, ended Sept. 24. Sales decreased 4.8 percent to $891.5 million year on year, compared with the third quarter of 2010, reflecting a same-store sales decrease of 4.3 percent. A decline in same-store sales in the U.S. was partially offset by stronger same-store sales in Mexico. Retail segment income was $28.5 million in the quarter, compared with $32.4 million in the prior year’s third quarter.

RadioShack said third-quarter sales and earnings were impacted by its September split from T-Mobile. Profits fell 99 percent to $300,000, net sales rose 3 percent to $1 billion, and comp-store sales slipped 4 percent for the three months, ended Sept. 30.

The mid-September carrier transition, from TMobile to Verizon, cost the chain $23.4 million, plus another $400,000 in T-Mobile inventory adjustments and costs related to a plant closing in China. Excluding these one-time items, net income would have fallen 67 percent to $14.9 million.

Systemax, whose primary retail brands are Tiger- Direct, CompUSA and Circuit City, reported higher net income and sales corporately, but lower consumer sales during the third quarter, ended Sept. 30.

Sales were $901.2 million in the quarter, up from the prior year’s $862.7 million. Net income was $10.6 million, up from the prior year’s $8.6 million

Consumer sales fell to $393.0 million in the quarter from the prior year’s $427.5 million.

By product category computer sales were $280.7 million for the quarter, up from the prior year’s $221.9 million. Computer accessories and software were also up, by almost $10 million, to $247.5 million. But CE product sales were down $22 million in the quarter to $167 million compared with the prior year.

– Additional reporting by Alan Wolf.
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