Aug. CE Sales Slump; Outlook Challenging

By Alan Wolf On Sep 13 2010 - 4:01am




NEW YORK — CE sales grew sluggish for some of the nation’s largest full-line discount chains last month, mirroring reports and sales projections from the independent specialty channel.

Among those reporting August sales results, Target said CE, including video games, music and movies, was the weakest performer within its hardlines business, which experienced a high single-digit decline in comp-store sales.

Net retail sales rose 3.4 percent in August to $5 billion, while comp-store sales edged up 1.8 percent.

In a statement, Target chairman/CEO Gregg Steinhafel said the company is pleased with its strong back-to-school performance and “healthy” traffic trends.

Within the warehouse club channel, Costco said CE comps ran “slightly negative” in August due to soft TV sales. TV comps fell by the mid-single digits in unit and dollar volume, offset by strength in personal navigation and cellphones. Costco said computer comps were flat.

The company’s net sales rose 9 percent in August to $5.9 billion while comp sales at U.S. stores increased 5 percent excluding the positive impact of higher gasoline prices.

At BJ’s Wholesale Club, net sales rose 4.9 percent to $794.6 million and comps climbed 2.2 percent excluding gasoline. The company cited computer hardware among the month’s strongest performers and room air and prerecorded video among the weakest.

Looking ahead, September results may not prove much better based on the cautious outlook of industry executives. Brand Source CEO Bob Lawrence, speaking at the group’s national convention last month, told dealers that the last 60 days were “the toughest I’ve ever seen,” and that market conditions will likely remain challenging.

Similarly, Jim Sendrak, electronics division manager of MEGA Group USA, acknowledged that “business is certainly tough” and will require dealers to pursue it aggressively.

That message was also echoed by Jim Campbell, president/CEO of GE Appliances & Lighting, who predicted “a very, very slow recovery” for the major appliance business and the overall economy due to weak job growth and the ailing housing market.

September sales tallies may also be impacted by Hurricane Earl, which skirted the densely populated East Coast at the start of the key Labor Day sales period.

Separately, the Conference Board Consumer Confidence Index, which had declined in July, improved moderately in August. The Index now stands at 53.5, up from 51 in July. The Present Situation Index decreased to 24.9 from 26.4. The Expectations Index increased to 72.5, from 67.5 last month.

Lynn Franco, The Conference Board Consumer Research Center director, said in a statement, “Consumers are about as confident today as they were a year ago (Aug. 2009, 54.5).”

Consumers’ expectations improved moderately in August, but, overall, they remain pessimistic. Those anticipating an improvement in business conditions over the next six months increased to 17 percent from 15.8 percent, while those anticipating conditions will worsen declined to 13.4 percent from 15.3 percent.

The Consumer Electronics Association (CEA) and CNET Index of Consumer Expectations (ICE) rose in August, but only by a half-point.

Confidence in consumer electronics fell more than two points to 79.8, but remains higher over the same period a year ago.

The CEA-CNET ICE rose to 157.8 this month. The ICE, which measures consumer expectations about the broader economy, is up by half a point over July and down more than 14 points from this time last year.

“Individuals remain concerned about their own financial wellbeing,” said Shawn DuBravac, chief economist and research director for CEA, “but the multi-month slide in consumer sentiment, which touched all-time lows in the index, appears to be subsiding.”

Consumer confidence in technology decreased slightly this month. The CEA-CNET Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, is down 2.2 points from July but is still 2.1 percent higher than this time last year.

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