Electronics Retailers Stick With Promotional Plans So Far
November 30 2009 - 3:52PM
Dow Jones News
Sales of consumer electronics--a winning category for retailers
over the Black Friday weekend--have been strong enough that
retailers seem to be sticking with their promotional plans.
As Black Friday weekend wore on, shopper traffic held up better
than a year ago, and retailers added new deals but didn't seem to
depart drastically from their plans, according to industry analysts
and consultants. By Monday, when some retailers offered a new round
of promotions in honor of "Cyber Monday," the number of discounted
items were smaller and deals generally weren't as compelling as
Friday.
That could be good news for both sales and profitability at
specialty electronics dealers like Best Buy Co. (BBY), Hhgregg Inc.
(HGG) and RadioShack Corp. (RSH).
Still, it remains to be seen whether shoppers will continue to
buy electronics without significant discounts, UBS analysts said in
a note to clients.
For the most part, shoppers throughout the weekend ignored
full-priced consumer electronics completely, so those items remain
full on the racks, said research firm Retail Eye Partners.
Added Wendy Liebmann, chief executive of retail consulting firm
WSL Strategic Retail, "Everybody was sticking to plan--retailers
and shoppers."
Shares of Best Buy, which rose in early trading, recently fell
0.4% to $42.67. RadioShack shares were 1.6% higher at $18.68, and
Hhgregg shares rose 1.3% to $19.14. Representatives of those
companies either declined to comment or couldn't be reached
immediately for comment on weekend trends.
The Consumer Electronics Association said consumer-technology
sales during the weekend appeared consistent with the group's
October forecast for a 6% increase in unit volume and with its
survey that showed 80% of people want to receive technology
products this holiday season.
The group's October forecast of a 7.5% total decline in
technology spending for the fourth quarter appeared on track given
pricing and product-mix trends.
"We're still computing some final Saturday and Sunday data, but
it does look like from what we can tell that traffic continued some
of that momentum" from Black Friday, said CEA chief economist Shawn
DuBravac. The overall drop in technology sales forecast by the
group reflects year-over-year declines in product prices, as well
as a shift in popularity for some smaller-ticket items, such as
netbooks versus laptops.
RBC Capital analyst Scott Ciccarelli raised his fiscal
third-quarter estimate for Best Buy Monday, citing further upside
to earnings possible due to strong margin performance.
"We believe the company has focused on preserving margins this
quarter and even Black Friday promotions appeared to be fairly
benign," he said.
FBR analyst Stephen Chick said RadioShack had a strong start to
the holiday season after opening a half-hour earlier than last year
and offering competitive doorbuster deals.
"The Radio Shack we visited in the New England area, as an
example, achieved [two times] last year's sales by 6:50 a.m. versus
what the store had done by 8:00 a.m. last year," Chick said. "The
early start to holiday doorbuster traffic gives us confidence that
RSH is likely to exceed sales expectations [as well as EPS] for
4Q09E, which will be reported in February, 2010."
But Barclays Capital analyst Michael Lasser said it's too early
to determine how the holiday shopping season will shape up for
electronics retailers and other so-called "hardlines"
retailers.
"In our view, consumers remain cautious with their discretionary
expenditures, which will lead to volatile spending patterns," he
said. "At the same time, we believe that most of the hardline
retailers have aggressively managed their inventory and will end up
taking fewer markdowns, which will provide some margin
support."
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com
HHGREGG (CE) (USOTC:HGGGQ)
Historical Stock Chart
From Mar 2024 to Apr 2024
HHGREGG (CE) (USOTC:HGGGQ)
Historical Stock Chart
From Apr 2023 to Apr 2024