New York – The day of reckoning has arrived for CE chains, which had skirted the economic slowdown that’s skewering the retail sector.
Finally feeling the pinch after consecutive record quarters is Best Buy. Aided by 11 new stores, sales rose 11 percent to $3.3 billion during the three months ended June 2. But more tellingly, comparable store sales fell 3.1 percent, due largely to weak PC demand.
Revenue also fell for the company’s Musicland subsidiary. Net sales were off 6 percent to $3.9 million and same store sales dropped 6.1 percent owing to soft sales of prerecorded music. Best Buy didn’t break out figures for its Magnolia Hi-Fi unit, but said its sales were essentially flat, reflecting the slowdown in that market’s technology companies.
The news was more grave at Circuit City. Sales for the quarter ended May 31 fell 13 percent to $2.7 billion while comp store sales plummeted 25 percent. President/CEO Alan McCollough blamed the declines on the absence of appliances, slow PC sales and ‘general softness’ in other categories. He said appliance replacement products, which include higher margin computer software, peripherals, accessories, video games, cameras and portable audio, ‘continue to experience considerable strength.’ Nevertheless, minus the impact of white goods, same store sales still fell 13 percent.
Sales at RadioShack also stalled. Total May revenue was flat at $325.2 million, although comp sales at company-owned stores rose 2 percent, giving chairman/CEO Len Roberts hope that ‘trends are heading in the right direction.’
The quarter wasn’t kind to Good Guys either. The West Coast specialty chain reported a 7 percent revenue dip to $171.5 million and an 8 percent drop in comps, which it attributed to the soft economy and California’s energy woes.
Among mass merchants, Sears saw sales fall 2.8 percent last month to $2.4 billion while same store sales fell 3.3 percent. Chairman/CEO Alan Lacy specifically cited major appliances as a continuing bright spot, even though the category was significantly impacted by cooler weather that curtailed room air conditioner sales.
One of the few sales winners was Wal-Mart, whose revenue rose 11.5 percent in May to $9.3 billion while comps rose 3.6 percent. By contrast, chief competitor Kmart saw sales slip 2.3 percent last month to $2.9 billion and comps slide 1 percent, while No. 3 discount chain Target enjoyed a 9.2 percent sales hike to $2.2 billion and a 1.5 percent gain in May comps.
Warehouse clubs were also winners in May. Costco grew sales 14 percent to $2.7 billion while comps rose 6 percent; Wal-Mart’s Sam’s Club saw sales rise 7.7 percent to $2.2 billion and comps grow 4.8 percent; and BJ’s Wholesale Club enjoyed an 8.8 percent hike in revenue to $401 million and a 4 percent comp store gain.
Finally, specialty niche chain Sharper Image reported a 14 percent rise in revenue to $29.3 million last month while comp sales rose 5 percent.