CE Helps Target, Walmart, Hurts Sears In Fiscal 2nd Quarter



CE was a cited factor in the quarterly performances of three national retailers, with Target benefiting the most, Walmart citing progress and Sears getting hurt.


reported mid-single-digit sales and earnings gains for its second fiscal quarter, ended July 30, and a resurgence in its CE business.

Profits rose 3.7 percent to $704 million on total sales of $15.9 billion, a 5.1 percent increase. Compstore sales increased 3.9 percent, while credit card revenues decreased 15 percent to $345 million.

Merchandising executive VP Kathy Tesija said the most notable improvement was in CE, where tablets led by iPad “were quite strong” and TV sales showed “stability, and even growth,” following several quarters of contraction.

In addition Target has expanded its CE trade-in service to 1,490 stores, and is accepting additional categories.

The service, provided in partnership with Bostonbased CE exchange and recycling service Next- Worth, will now be offered in all stores with Target Mobile centers.

The trade-in program now also accepts preowned calculators and DVDs, in addition to iPods, iPads, iPhones, cellphones, Nintendo DS units and video games.

Wal-Mart Stores

said Walmart U.S. and Sam’s Club reported higher sales in its fiscal second quarter, but corporate comp sales were flat in the U.S., but CE sales were cited as a positive trend.

Walmart U.S. stores had sales of $64.9 billion, up 0.4 percent, but comp-store sales, excluding fuel, was down 0.9 percent in the quarter, compared with a 1.8 percent drop the prior year.

Sam’s Club reported sales of $12 billion, excluding fuel, an increase of 4.9 percent when compared with the prior year’s second quarter. Sam’s Club had a 5 percent increase in comp-store sales for the quarter vs. the prior year’s 1 percent increase.

Total comp-store sales for Wal-Mart Stores were flat in the quarter, excluding fuel, compared with a 1.4 percent drop in last year’s quarter.

Operating income for Walmart U.S. stores was up 2.1 percent to $4.9 billion compared with last year, while Sam’s Club had a gain of 15 percent to $492 million.

Bill Simon, Walmart U.S. president/CEO, commented on CE, saying, “Our hardlines [sales] are improving,” but he noted, “We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior.”

In a recorded earnings announcement, Simon reported, “Double-digit deflation in TV prices still exists, but our unit sales were up again. Customers want innovation, and tablets continue to sell very well. We continue to see strength in our prepaid wireless business [and] Straight Talk remains a $1 billion-plus brand for Walmart U.S.”

He added that during the quarter, “we also launched a delivery and installation service program for electronics. We’re providing delivery, setup and installations for TVs. We also offer basic setup for home theater and wireless networks. The in-home service network has up to 50,000 technicians available to service our customers. Our prices are very competitive, and this now puts us on par with other electronics retailers.”

At Sam’s Club, Brian Cornell, president/CEO, said, “Even with average selling price deflation, our consumer electronics business delivered a mid-single- digit comp sales increase. New products like tablets are driving greater sales in electronics.”

Sears Holdings

reported a deeper loss for its fiscal second quarter, with lower CE sales being blamed for decreases in comp-store sales.

The net loss was $146 million, which was higher than the $39 million loss in the prior year’s second quarter. Revenues were $10.3 billion, down slightly from the prior year’s $10.5 billion.

Sears Domestic comp-store sales declined 1.2 percent, which would have been flat if CE sales didn’t go down, the company reported. While Kmart’s comp-store sales received a boost from its appliance business, CE, among other categories, was a drag on that chain’s volume also.

Sears Holdings said that beginning with the first quarter of 2011, it includes in comp-stores sales online sales from




shipped directly to customers. These online sales increased 32 percent over last year.

The operating loss for Kmart during the second quarter was $16 million, compared with a profit of $19 million in the prior year. The Sears Domestic loss for the quarter was up $98 million, to $163 million, in the quarter.

Sales for Kmart were $3.62 billion in the quarter, down slightly from the prior year’s $3.63 billion. At Sears Domestic, sales were $5.53 billion, down from $5.67 million in the prior year’s second quarter.


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