The Canadian Press - ONLINE EDITION

Retailers Best Buy and Sears report weak consumer electronics sales

  • Print

NEW YORK, N.Y. - Is America's love affair with gadgets fading?

Best Buy and Sears on Thursday both blamed their weak quarterly results on the fact that shoppers aren't shelling out for consumer electronics.

Already squeezed by tough competition from online retailers like Amazon.com and discount stores like Wal-Mart and Target, retailers like Best Buy and Sears have been cutting costs and revamping merchandise and store formats to attract customers.

But the consumer electronics remains stagnant. Sales haven't budged from about $145 billion in three of the last four years, according to research firm NPD Group.

Part of the problem is consumers are holding out for smartphone and tablet computer launches this fall. Apple and Samsung are expected to debut new products and an Amazon smartphone is rumoured to be in the pipeline. Meanwhile, experts say things like the ultra-high definition 4K TVs have not been compelling enough for TV owners to upgrade.

"The category was weak. There's no 'Wow' type product to get people in stores or even online," said Brian Sozzi of Belus Capital Advisors.

One exception: trendy products like wearable fitness devices. Sozzi said they're "in demand, but not as in demand as you think."

The result is weak sales. Best Buy said revenue fell 3 per cent to $9.04 billion during the quarter that ended May 4. And revenue in stores open at least 14 months, a key retail metric, declined 1.9 per cent. The company expects the metric to decline in the next two quarters as well.

"As we look forward to the second and third quarters we are expecting to see ongoing industrywide sales decline in many of the consumer electronics categories in which we compete," said Best Buy CFO Sharon McCollam. "We are also expecting ongoing softness in the mobile phone category as consumers eagerly await highly anticipated new product launches."

Sears, meanwhile, said TV sales were especially weak during the quarter, particularly at Kmart. Revenue in stores open at least one year edged up 0.2 per cent at Sears stores but fell 2.2 per cent at Kmart, and weak consumer electronic sales contributed to more than 1 percentage point of that drop.

"The biggest negative contributor to sales has been from our consumer electronics business at both Sears and Kmart," said billionaire hedge fund investor Eddie Lampert, who is Sears' Chairman and CEO in a prerecorded call. "To address this decline, we are moving this business from a focus on selling televisions to a company empowering 'connected living,' which will bring together our capabilities in fitness equipment, electronics, appliances, home services, and auto services."

Stephen Baker, an NPD consumer technology analyst, says unless a new game-changing product like the iPad is introduced, consumer electronics sales are unlikely to budge much.

"It's a pretty mature category, and for every great opportunity like 4k TVs or touch notebooks there are continued declines in cameras, small screen TVs, or desktop computers," he said. "Right now, there isn't anything that can provide $5, $6 or $7 billion in incremental sales for the industry and when you're a $145 billion industry that's what you need to move the battleship."

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Key of Bart - Take It Easy

View more like this

Photo Store Gallery

  • A Canada goose makes takes flight on Wilkes Ave Friday afternoon- See Bryksa’s 30 Day goose a day challenge- Day 09- May 11, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • An American White Pelican takes flight from the banks of the Red River in Lockport, MB. A group of pelicans is referred to as a ‘pod’ and the American White Pelican is the only pelican species to have a horn on its bill. May 16, 2012. SARAH O. SWENSON / WINNIPEG FREE PRESS

View More Gallery Photos

Poll

Do you like Gord Steeves’ idea to sell four city-owned golf courses to fund road renewal?

View Results

View Related Story

Ads by Google