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Posted
Jun 19 2008, 09:19 AM
by
Anthony Mirhaydari
Rating:
Back in April, brainy Wall Street analysts expected the vast majority of Americans to save or pay down debt with their economic stimulus checks. Indeed, poll after poll indicated a growing population of newly converted pinchpennies. But old habits die hard: As soon as those U.S. Treasury checks hit mailboxes in the first week of May, our nation of manic consumers forgot all about Ricardian equivalence, rising inflationary pressures, and eroding personal balance sheets. Instead, they did what they do best, and pushed retails sales well past expectations for the month.
Big-time electronics retailer Best Buy -- as indicated by its recently released quarterly results -- was a popular offloading point for those rebate checks as HDTVs, Blu-rays, and iPods took the place of mortgage payments, retirement accounts, and debt reduction. Revenues jumped 13% to $9 billion, helped by store expansions in North America and China, with comp-store sales up an impressive 3.7%. Margins were helped by strength in the company's Geek Squad services team and in sales of extended warranty plans
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Posted
Apr 09 2008, 11:08 AM
by
Kim Peterson
Rating:
Walk into the Circuit City in my town, and you'll suddenly get a strange sensation. Look around...you're the only person there. Wait, someone must work here. Hello? Anyone? Then head over to Best Buy, which is packed with customers and ringing up sales.
Why is Circuit City struggling while Best Buy shines? There are many reasons: prices, marketing and sales strategy top the list. Look at the stock prices of the two: Circuit City shares have fallen from nearly $19 a year ago to $4.30 today, while Best Buy shares have stayed in the $40 to $50 range all year.
Circuit City might see some big changes soon. BusinessWeek reports that the retailer may have hired Goldman Sachs to look into sale possibilities. This comes after the company's turnaround plan has failed. Analysts say one of the worst decisions executives made was to fire 3,400 of the most experienced workers and replace them with lower-paid ones, according to Business Week. Customer service went out the window.
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Posted
Mar 06 2008, 01:39 PM
by
Robert Walberg
Rating:
Not skyrocketing energy prices, not the rising foreclosure rate, not even the slowing U.S. economy will stop GameStop from posting monster sales and earnings gains when the company reports its fiscal fourth quarter earnings in less than two weeks.
Bolstered by strong demand for video game hardware systems such as the Wii and Xbox 360, and continued strength in software sales, the world's leading video game retailer is expected to deliver Q4 earnings of $1.12 per share on revenue of $2.9 billion, -- well above last year's results of 82 cents and $2.3 billion.
Normally, a stock would rally into such news. But these aren't normal times. GameStop is down 32% from its December 2007 high, as investors flee any and all stocks tied to the consumer. However, unless you're a gamer or are related to one, you might not understand that GameStop actually stands to benefit competitively from a downturn. Unlike Target, Best Buy or Wal-Mart, GameStop sells used games and game consoles. In fact, sales of pre-owned merchandise now represent about 25% of total sales.
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Posted
Jan 14 2008, 11:16 AM
by
Robert Walberg
Rating:
The "softer side of Sears" no longer refers to its apparel merchandise, but to its sales and earnings history.
Citing difficult economic conditions and growing competition, the company warned that fourth-quarter sales and earnings would fall well shy of Wall Street estimates. Management now expects quarterly earnings of between $2.59 to $3.48 per share, a whopping 20% to 40% below the Street's consensus estimate. The stock responded by falling to its lowest level in three years.
It's a bit surprising to me that so many investors were surprised by the company's dismal quarter -- especially given that Sears issued an even bigger warning last quarter. The company has also had a history of underperforming expectations over the past several years. Let's face it, the Lampert experiment has been a total bust. You can prop up numbers only so long by cutting costs and repurchasing shares -- at some point you have to improve the core business and Lampert, chairman and architect of the merger with Kmart, never had the retailing experience necessary to get the job done.
The idea of merging two struggling retailers in hopes of creating a thriving one was doomed from the start -- especially since management was more concerned with pleasing Wall Street analysts than store customers. The folks on Wall Street might not be the brightest bunch in the world, but even they are beginning to realize that Lampert's financial razzle dazzle hasn't done anything to make Sears or Kmart more relevant to shoppers.
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Posted
Nov 15 2007, 08:52 AM
by
Robert Walberg
Rating:
Within the past week Wal-Mart and Corning delivered positive earnings surprises due in part to the strength of large, flat-panel televisions. Investors responded by driving the share price of both stocks smartly higher. If you missed both of those moves, you might want to consider jumping into Best Buy ahead of that company's earnings report due in mid-December.
No company is better positioned to exploit the growing demand for large television sets this holiday season than the country's top electronics retailer. Price competition might keep margins from expanding greatly, but robust sales growth in the television/home theater area should result in some very favorable bottom-line comparisons. Best Buy is projected to earn 40 cents a share in its fiscal third quarter, up an impressive 30% from last year.
But Best Buy's results won't be driven only by big TV sets. Despite the difficult economic conditions, strong demand for other consumer electronic items such as gaming consoles, digital music players, high-end cell phones, portable navigational devices and laptop computers should make Best Buy a top holiday destination for shoppers. Most of these items are priced to move and even though consumers are feeling the pinch from higher energy prices and declining home values, crowded Best Buy stores suggest that, yes Virginia, there is a Santa Claus -- and he will be filling his sleigh with consumer electronic goodies again this holiday season.
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