NEW YORK —
CE price erosion, particularly in TVs, proved a drag on sales and earnings for national retail chains in the fourth quarter.
The trend, compounded by severe winter weather, continued in February, with sales at CE and appliance stores falling 4.1 percent, according to a Spending- Pulse report by MasterCard Advisors.
No. 1 retailer
said CE price compression was the main culprit behind a nearly 2 percent decline in same-store sales during its fiscal fourth quarter, and is looking to tablets to help boost category revenue.
Comp sales declined 1.8 percent at the company’s U.S. flagship stores for the three months, ended Jan. 31, while net sales slipped 0.5 percent to $71.1 billion. Total company sales rose 2.5 percent to $115.6 billion for the quarter, while earnings increased 4.3 percent to $5 billion.
Despite price pressure, the discount chain increased its TV unit volume and gained market share during the period, said Bill Simon, president/CEO of Walmart U.S., while sales of prepaid wireless products and services were “very strong.” Simon said average CE selling prices will continue to fall, particularly in TV, gaming and hardware, although sales declines in those categories are expected to begin abating through the second and third quarters. He added that Walmart will increase its focus on iPads and other tablets, which offer greater growth opportunities and can help mitigate some of the pricing pressure on CE.
Meanwhile, lower CE sales and slimmer margins led
fourth-quarter earnings down 13 percent to $374 million. Results were also pressured by store closing, severance and pension plan costs, the company said. Net sales slipped 0.8 percent to $13.1 billion for the three months, ended Jan. 29, which reflected a 1.2 percent decrease in comp-store sales and 34 fewer Sears and Kmart stores year over year.
At Sears, net sales declined nearly 3 percent to $6.7 billion while comps fell 4.5 percent. More than half of the comp decrease was in consumer electronics, the company said. Net sales at Kmart declined 2 percent to $4.9 billion while comps increased 2.5 percent, driven by gains across most product categories.
In an open letter to shareholders, chairman Edward Lampert called Sears’ results “completely unacceptable,” and said steep price declines in CE, particularly TVs, must be offset “by adding new innovative products and bundling them with services and solutions that meet customers’ evolving needs.” The company’s performance in appliances was similarly unacceptable, he said, given Sears’ market share dominance and broader brand selection. But the macroeconomic challenges facing the majap industry were compounded by “our own missteps,” including delays in transitioning to its newly redesigned Kenmore line.
overcame acknowledged challenges within its CE departments to post a 10.5 percent increase in fourth-quarter earnings to $1 billion on soaring credit card profits and strong retail operating margins. Net sales rose 2.8 percent to $20.3 billion for the three months, ended Jan. 29, and comp-store sales increased 2.4 percent.
February sales rose 2.4 percent to $4.8 billion and comps edged up 1.8 percent, weighed down by a weak showing from CE and movies.
In an earnings call, merchandising executive VP Kathee Tesija said Target’s CE, entertainment and home product businesses are “more difficult” than other merchandise sectors. However, CE departments will be boosted by the addition of 600 RadioShack-operated mobile kiosks by June, for a total of 1,450 installations, and by this month’s launch of Nintendo’s 3DS handheld gaming system. Target is “over-indexed with Nintendo” as a familyfocused retailer, she noted, and the chain’s 5 percent cashback program, through its private-label credit card, will provide a price advantage with the device’s controlled $249 retail. Despite challenges within certain CE categories, the department remains “a very productive part of the store,” and Target has no plans to significantly reduce its packaged media assortment, Tesija said.
Among warehouse clubs, channel leader
reported a 16.4 percent rise in fourth-quarter profits, to $348 million. Net sales for the three months, ended Feb. 13, increased 11 percent to $20.5 billion, and U.S. same-store sales rose 3 percent excluding gasoline.
For the full month of February, net sales rose 14 percent to $6.4 billion and U.S. same-store sales climbed 4 percent excluding gasoline. CE posted negative February comps due to falling prices and unit sales of computers and audio equipment. TV prices also declined, but were offset by a 9 percent spike in unit volume that delivered flat dollar sales for the month.
division posted a 2.5 percent gain in fourth-quarter net sales to $11.9 billion and a 2.7 percent hike in comp sales, both excluding gasoline, for the three months ending Jan. 31. Sam’s Club president/CEO Brian Cornell said that despite continued TV price erosion, the division was “very pleased” with its CE and IT sales relative to the industry, and grew market share over the fiscal year. “Members responded well to our strong brand offering including LG, and the Apple iPhone and iPad,” he said. “We continue to experience price pressure in electronics, especially in televisions, but had positive unit sales growth of TVs for the quarter.”
, store-closure costs and other charges sent fourth-quarter profits plummeting 81 percent to $10.2 million. Excluding the $41.1 million post-tax expense for closures, restructuring activities and asset impairment charges, earnings declined 5.9 percent for the three months, ended Jan. 29. Net sales rose 7.4 percent to $2.9 billion year over year, and same-store sales edged up 1.7 percent for the period, excluding revenue from gasoline. Video gaming was among BJ’s strongest-performing categories in the fourth-quarter, while TVs and prerecorded video were among its weakest.
February net sales increased 9.3 percent to $814.1 million, and same-store sales rose 3.1 percent excluding gasoline. TVs and prerecorded video continued to underperform last month, as did computer hardware and software. In addition, comps were negatively impacted 1 percent to 1.5 percent by severe winter weather, BJ’s said.
said fourthquarter profits fell 25 percent to $57 million for the three months, ended Dec. 31, on weakness in its T-Mobile business, a higher mix of lower-margin wireless handsets, and seasonal markdowns and product transitions in non-wireless categories. Net sales rose 3.8 percent to $1.4 billion, and comp sales at company- owned stores and kiosks rose 1.3 percent, led by the rollout of wireless departments for Target, and higher postpaid sales of smartphones and prepaid sales of handsets, laptops and accessories.
, fourth-quarter profits rose 17 percent to $275 million and net sales were essentially flat at $6.4 billion for the three months, ended Jan. 29. Retail sales in North America were flat at $2.6 billion while same-store sales slipped 2 percent due to winter storms and softness in computers and peripherals. Staples chairman/CEO Ron Sargent said sales recovered in the first quarter of 2011 and described business as “healthy.”
Within the home-improvement channel, operational upgrades and the recovering economy sent fourth-quarter profits soaring for leaders Lowe’s and
. The latter’s fourth-quarter earnings skyrocketed 72 percent to $587 million on sales of $15.1 billion, a 3.8 percent increase year-over-year. Comp-store sales rose 4.8 percent in the U.S. for the three months ended Jan. 30, with about a quarter of the increase attributable to major appliances, the company said.
reported a 39-percent spike in fourth-quarter earnings, to $285 million, while net sales rose 3.1 percent to $10.5 billion. Comp sales for the three months ended Jan. 28 edged up 1.1 percent in North America.
On the e-commerce front, February storms may have helped online sales, which rose 13 percent last month, according to MasterCard Advisors’ SpendingPulse report. Online sales of CE increased 5.4 percent in February, the sixth consecutive month of growth.