Retailers, consumers and prices
The top U.S. consumer electronics retailer checked in with a lower-than-expected profit on Tuesday, as it still had trouble selling videogames and digital cameras to cautious shoppers.
Its profit fell to $158 million, or 37 cents per share in the second quarter that ended Aug. 29, from $202 million or 48 cents per share, a year earlier.
Excluding a tax impact, its profit was 40 cents a share, while analysts had expected Best Buy to post a profit of 41 cents per share.
The failure of Circuit City, which closed its doors early this year, has helped Best Buy gain market share in past months. But the latter’s failure to meet profit expectations stood out in the broader retail sector, where several other companies have leaned on cost cuts and lower inventory to compensate for weak demand.
Check out who has the highest customer satisfaction ranking among major appliance retailers.
It’s Best Buy, according to a study by J.D. Power and Associates.
The electronics retailer received a 797 out of 1,000 on the scale, performing particularly well in installation service and delivery service, J.D. Power said in a news release.
The study also takes into account sales staff, the store facility, merchandise and price.
Next was hhgregg at 794 and Lowe’s at 792. Sales staff and price were pluses for hhgregg, while Lowe’s did particularly well in store facility and merchandise, J.D. Power said.
The study is based on responses from more than 4,200 consumers who bought a laundry or kitchen appliance within the previous 24 months.
Also in the basket:
Dollar Tree posts higher profit, raises outlook
Williams-Sonoma post surprise profit; ups FY view
Charming Shoppes posts Q2 profit below Street view
Toys “R” Us offers discounts for trade-ins (WSJ)
Brian Dunn, who is set to become Best Buy‘s CEO next week, has his own example of what it means to be connected in today’s digital age.
When he was visiting London a few weeks ago, Dunn watched the L.A. Lakers take on the Utah Jazz in the NBA playoffs on his notebook computer. His three sons, who are also big basketball fans, were watching the game on TV at home, Dunn said. They kept in touch using Skype to have a video chat.
Check out a lack of government stimulus checks and rising gas prices weighing on consumers –and the retailers that are trying to sell them stuff.
Best Buy reported lower earnings for its fiscal first-quarter (which ended May 30), and said sales at its stores open at least 14 months declined the most during May. A year ago it got a boost in that month when shoppers came into its stores to spend those government stimulus checks.
Around this time last year, stimulus checks amounting to more than $100 billion started landing in cash-strapped consumers’ bank accounts, giving them a chance to spend and boosting sales for many retailers.
But this year’s stimulus entails lower withholding taxes and not ”hard checks,” which means “the effects of this year’s stimulus on retailers will be a far cry from 2008,” Pali Capital analyst Stacey Widlitz said in a research note to clients.
Check out the trifecta of profits that topped Wall Street views.
Expectations have been pretty low for the consumer and retail sector given the tough economy, cash-strapped consumers and the overall funk in the market keeping shoppers away.
On Thursday, a few companies managed to beat expectations. Is it a signal that things are finally picking up?
Late on Tuesday, Target said it would cut jobs, mainly at its headquarters in Minneapolis, while Best Buy (also headquartered in Minneapolis) said it planned involuntary layoffs after too few employees took voluntary exit packages.
Check out who’s checking out at Best Buy.
Brad Anderson is retiring as CEO of the electronics retailer in June and will be succeeded by COO Brian Dunn.
“I’ve always wanted to leave the organization at the right interlude: when I saw a new leader ready to take the organization to a new level, higher than I could take it myself,” Anderson said in statement.
But he is also leaving during the worst retail environment in decades, one that is seeing competitor Circuit City go out of business.
Best Buy same-store sales fell 6.5 percent in December, though that made it one of the best performing retailers during that key holiday month.
“I don’t think the Street will have an issue” with Best Buy naming Dunn, Telsey Advisory Group analyst Joseph Feldman said. “I think the question would be about timing.”
Given the retail environment, Dunn might also want to question the timing.
Also in the basket:
Coach posts lower profit, cuts expansion plans
Sainsbury seen cutting 200 central support jobs
(Reuters photo of Anderson at 2004 Reuters Consumer Summit)
Bigger appears to be better, at least in the retail industry. According to retail brand consultancy Interbrand Design Forum, Walmart is the most valuable U.S. retail brand.
Interbrand just ranked the 50 most valuable U.S. retail brands for 2009. While the firm looked at the impact of the brands themselves, the list shows that big box stores have the power. Rounding out the top four – Best Buy, Home Depot and Target.
Interbrand said a brand accounts for 25 percent of the decision to shop at a store. It gave Walmart — Wal-Mart’s U.S. unit – a brand value of $129.8 billion. While that makes the world’s largest retailer the brand value leader, that value is well short of the $235.9 billion in sales racked up at U.S. Walmart stores over the 48 weeks that ended on Jan. 2.
Check Out Circuit City in deal talks.
The bankrupt electronics chain is negotiating with two undisclosed parties that could either buy the company or provide it with additional financing. The company said the parties are considering providing it with financing to allow it to sustain its operations and restructure through a stand-alone plan, and/or buying the company outright.
Naturally, eyes will turn south toward Ricardo Salinas Pliego. The Mexican retail and media tycoon said in November that he owned 28 percent of Circuit City shares and indicated that he might seek control of the chain, which buckled under the pressure of declining consumer spending and increasing competition by the likes of Wal-Mart and Best Buy. It filed for Chapter 11 bankruptcy protection in November.