By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Despite attacks from established first-tier brands in the low end of the flat-panel TV business in recent quarters, top executives at Vizio said the company showed another profitable quarter, keeping alive its perfect record of black ink since entering the market.
The company, which is privately held and does not release financial statements to the public, has never had an unprofitable quarter, Jeff Schindler, Vizio business operations and marketing VP, told TWICE.
During the third quarter the company showed a 5 percent to 6 percent increase in unit sales compared to the same period last year. On a quarter-to-quarter basis unit sales increased about 2 percent, said John Morriss, Vizio core products VP and general manager.
"The mix has shifted, as we tried to push out even more technology," Morriss said. "We moved into the mid- and high-product ranges during the period and we still got a lift in units, so that's a pretty good view of how the brand's being received, I think."
The company's recently introduced XVT line, which expanded the company's mix with both larger screen sizes and 120Hz technology for smooth fast-motion images in LCD TV sets, performed "above our expectations," Schindler said.
"Among our 47-inch offerings, now, the 120Hz is far outselling the 60Hz," Schindler offered. "Last week's sell-through was almost 60 percent 120Hz."
The secret, Morriss said, was in line with the company's initial mission of providing value from the low end through the high-performance products.
"I think the key is that we are trying to keep the price gaps minimal to encourage customers to step up to the next technology," said Morriss. "Although it's not necessarily a part of our conscious strategy, clearly it is disruptive to the high-end brands when we break the ceiling of the extreme premium prices for products when we deliver an affordable price."
"I think we had a little slowdown there when Sony and Samsung came down on their prices on the retail side, and now we are seeing momentum pick back up again," Schindler said.
The success in the step-up approach is giving Vizio's retail partners confidence to expand their assortments with the step-up lines, Schindler said.
Sears, for example, is expanding its Vizio assortment heading into the fourth quarter, as Wal-Mart continues to grow sales at the entry end.
Costco, which Vizio leveraged to launch the line and build its success, is also seeing continued growth with the brand despite the addition of the two mass-merchant chains, Schindler said.
Sam's Club has had less Vizio product shelves since Wal-Mart signed on, but "that is changing as we enter the fourth quarter," Schindler said.
Morriss added that Vizio is using its expansive lineup to tailor the right feature set to the demographics of each account.
Despite the economic outlook, Schindler said Vizio is expecting growth again this year, in part, because of its careful selection of retail partners.
"There are some reports out now saying year-over-year September retail sales were down, but they are also saying the sales at Wal-Mart, Costco, Sam's Club and BJ's were all up year over year in September," said Schindler, " so I think we are positioned very well with our partners and our mix."
In part to counter the aggressive positions the premium brands have taken to expand LCD into mass merchant and club channels, Vizio expanded its assortment of plasma sets this year, with screen sizes running from 32- to 50-inch Full HD.
"In the smaller [plasma] sizes — 32 to 42 — Wal-Mart has been very successful with that," said Schindler. "On the club side, we sell more on the higher end in the 50-inch HD and Full HD. Right now at the clubs our price is pretty much in line with Panasonic, and we been very pleasantly surprised at how well we are still selling those sizes."
Schindler said Vizio continues to sell products to Circuit City, but given the chain's uncertain financial future, "our inventory with Circuit City at this point is at a small healthy size."
From a promotional standpoint, going into the holidays Schindler said Vizio has shifted more of its business, which had been strong with Circuit City last year, toward Sears.
Schindler said Sears is expanding its Vizio assortment in the fourth quarter, adding more step-up goods including 120Hz LCD.
As for the holidays, Schindler said it is unlikely that Vizio will implement instant rebates or similar tools used by some of the performance brands to generate sales, opting instead to issue price cuts in the line where appropriate, in coming weeks.
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.