By Lisa Johnston
New products on display at the American International Toy Fair, held in N
A recent flurry of financial reports from publicly held retailers involved in CE and/or major appliances illustrated the weak state of the economy.
RadioShack reported weak fourth-quarter sales, which pushed earnings lower for the three months, ended Dec. 31.
Net sales declined 7.7 percent to $1.3 billion for the period, while net income fell 38.6 percent year over year to $62 million.
Same-store sales slipped 9.2 percent on weakness in the GPS, MP3 player, media storage, digital imaging and toy merchandise categories, but were partially offset by the strong performance of digital converter boxes, postpaid wireless, flat-panel TVs and laptop computers, the company said.
Net sales at company-owned stores fell 10.2 percent. Sales at franchised stores fell 4 percent, and kiosk sales slipped 2.2 percent, but were offset by a 54 percent increase in online sales and gains from RadioShack’s recently acquired 200-store Mexican operation.
RadioShack doubled its flat-panel TV sales, sold 3 million digital converter boxes and enjoyed double-digit increases in laptop volume during the three-month period.
The chain also saw a resurgence in its Sprint and AT&T post-paid wireless businesses, which store operations executive VP Bryan Bevan attributed in part to fresh merchandise and new display tables that accommodate a broader assortment of handsets and more live models.
RadioShack will continue to operate Sam’s Club wireless kiosks under a new contract that runs through 2011, Gooch added, although its contract to operate Sprint kiosks will soon expire.
The 2.2 percent decrease in kiosk sales was primarily due to weak sales at fewer Sprint kiosks, but was partially offset by an increase in sales generated by the Sam’s Club kiosks, the company said.
Office Depot said a series of one-time charges led to a $1.5 billion net loss during its fourth quarter, ended Dec. 27.
The loss would have been $199 million without the charges, which included $1.3 billion in goodwill and trade-name impairments and $169 million for a strategic restructuring that included store and distribution center closings, job cuts and asset write-downs.
An additional $125 million in pretax charges reflect the impairment of Office Depot’s North American retail stores amid the business downturn.
Operating expenses, adjusted for the charges, increased by $42 million during the quarter, and cash flow from operations was $30 million.
Net sales declined 15 percent to $3.3 billion during the period and fell 17 percent to $1.4 billion at its North American stores. Same-store sales in the United States and Canada tumbled 18 percent.
The chain said business in California deteriorated during the quarter, and that while Florida remains its weakest market, sales there are declining at a slower pace than in the rest of the country.
The North American retail unit had an operating loss of $119 million — due largely to sales declines.
During the quarter, Office Depot opened two new stores, closed 10 and relocated one, bringing the total North American store count to 1,267. The company also remodeled 11 locations during the period.
The company said its restructuring program should free up $105 million in cash this year, and that it is “actively pursuing” other internal sources of liquidity in 2009, including sale leasebacks of owned properties in the U.S. and Europe. Office Depot operates 1,713 stores worldwide in addition to a $4.8 billion e-commerce operation.
Sears Holdings said falling consumer confidence took a toll on its business in the fiscal fourth quarter, sending sales and earnings lower.
Net income for the three months, ended Jan. 31, fell 55 percent to $190 million, and net sales slipped 12 percent to $13.3 billion.
Same-store sales fell 8.3 percent in the U.S., reflecting an 11 percent drop at Sears stores and a 5 percent decline at Kmart locations. The downturn was felt across most major categories, but was driven by products impacted by the weak housing market, such as appliances, and by the slowdown in consumer spending, including home and household goods, the company said.
Earnings results include a charge of $336 million to cover the cost of 32 store closings and severance, and an impairment charge the company’s Orchard Supply Hardware subsidiary. The closings include 17 Kmart stores, three Sears Grand stores, two Sears Essentials locations and four The Great Indoors stores.
The Home Depot reported a $54 million loss in its fiscal fourth quarter, ended Feb. 1, while sales declined 17.3 percent to $14.6 billion for the period.
The loss also reflects one-time charges and write-downs of $602 million related to the closing of Home Depot Expo, the decline in value of its 12.5 percent interest in distributor HD Supply and a loss from discontinued operations.
Comp-store sales fell 13 percent during the quarter, which had one less selling week than the year-ago period. Excluding the calendar shift, comp sales declined 11.5 percent.
Target’s retail and credit card businesses took a hit in the fourth quarter due to the faltering economy, sending net earnings down nearly 41 percent to $609 million and sales down 1.6 percent to $19 billion for the three months ending Jan. 31.
Same-store sales declined 5.9 percent from the year-ago period, the discount chain reported.
Costco reported a 27 percent drop in earnings during its second fiscal quarter, ended Feb. 15. Net sales fell 1 percent to $16.5 billion for the three-month period, while comp-store sales within the U.S. also slipped 1 percent.
Net sales also fell 1 percent in February, to $5 billion, while comp sales increased 4 percent during the month, excluding the negative impact of gas price deflation.
BJ’s said its earnings rose 5 percent to $52.7 million during its fiscal fourth quarter, ended Jan. 31, on easier year-ago comparisons. Net sales for the period rose 3.2 percent to $2.5 billion, and comp-store sales grew 6.4 percent excluding gasoline.
For the month of February, net sales rose 2.4 percent to $670 million and comp sales increased 8.2 percent, excluding gas. Traffic was up about 7 percent and the average transaction amount increased by about 1 percent, BJ’s said.
Categories with the strongest sales gains included PCs, TVs and video games, while prerecorded video was among the weakest performers.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.