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The Bottom Line Is Just That

Another year has just flown by in the electronics/appliance industries. The speed with which things change in one year in this business is illustrated by our annual retail retrospective that was in today’s print edition and posted today.

At the beginning of 2007 the industry was coming off of a double-digit sales gain in holiday sales, there didn’t seem to be many serious problems with CompUSA or Tweeter. There was no inkling of changes afoot at Circuit City. MyerEmco and Harvey Electronics were just members of the PRO Group. Sharp and Pioneer were competitors. So were JVC and Kenwood. And everyone was railing about the lost margins in flat-panel TVs.

It was the latter event, the dramatically lower flat-panel pricing that was the thread that caused a ripple effect across the industry and became a tipping point for many. Whether you were in flat-panel TVs or not, it became harder to make a profit as the year went on, for dealers and suppliers alike.

Some of the moves were a long time coming, such as Matsushita’s sale of JVC, but the surprise was, after much speculation, that the suitor was Kenwood. And speaking of surprises, who would have figured that Sharp would invest in Pioneer?

And after my many trips to buying group meetings over the years, this spring’s PRO Group meeting was the first I attended where one and two of its members – MyerEmco and Harvey – decided to merge. Ironically when the news broke I was traveling back to the Hyatt Regency in Scottsdale, the site of the PRO meeting, after visiting DBL Distributing, which turns out was negotiating that day with Ingram Micro. By June, DBL and Ingram inked their deal, but the MyerEmco/Harvey fell through in August.

Tweeter, PRO’s largest member, announced at the end of that meeting it was considering Chapter 11 protection. It did file, and longtime president/CEO Joe McGuire left, as Schulze Asset Management decided to buy the chain and give it a go.

And the demise of CompUSA, after owner Mexican billionaire Carlos Slim Helu bought and merged The Good Guys into its operation and who had said a couple of years ago that he wanted to buy Circuit City, was dramatic but not unexpected.

The bottom line to all of these stories is just that … the bottom line. Margins in CE, and major appliances for that matter, are thinner than ever.

And with energy costs soaring, the credit crisis lingering and consumer confidence sagging, in CE, and major appliances for that matter, profits are thinner than ever too. As we enter the New Year those are the challenges the industry will face. Still the popularity of consumer electronics is still soaring, which may take a bite out of those negative macro-economic trends.

This is a reminder that it is our last print edition of 2007 so we at TWICE wish you a Happy Holiday season and profitable New Year. Check for breaking news until our special International CES issue debuts on the show’s opening day, Jan. 7. We will be in Las Vegas covering CES both online at and in print issues throughout January.