IBM forecasts 4.8 percent year-over-year holiday-selling-season growth across the retail industry this year, compared with 4.2 percent sales growth in 2017, said the company Wednesday. “Consumer appliances,” including electronics, will lead all product categories this year with 15.2 percent projected growth over 2017, it said. “Weather conditions will affect what people buy and when,” said IBM. Milder conditions will mean lower demand for snowblowers and cold-weather apparel, higher demand for electronics and toys, it said.
Wedbush Securities upgraded Best Buy to “neutral” from “underperform,” in a research note to investors Wednesday, saying the retailer has “consistently defied our expectations,” by settling on "the right formula for long-term growth.” Analyst Michael Pachter applauded Best Buy for achieving “difficult financial targets” year after year. Pachter still has concerns about competition from Amazon but said it's poised to deliver on its promises in coming years. The analyst adjusted FY 2020 estimates for revenue of $42.6 billion from $41.9 billion and for 2020 earnings per share to $5.46 from $5.30, reflecting better comparable sales than previously estimated. Best Buy has “thrived despite heavy competition from Amazon,” and the battle will continue, but Best Buy “has firmly established itself as ‘the last man standing’ in consumer electronics retail,” Pachter said, attributing its ability to maintain share “in the face of heavy odds" to a focus on customer service.
Analysts’ sentiment toward Best Buy stock is “very bearish” ahead of the fiscal Q3 earnings report, due Tuesday, wrote Seeking Alpha analyst Rick Pendergraft in a research note Monday. Analysts expect the company to earn $0.85 per share in Q3 on revenue of $9.56 billion, vs. $0.78 a year ago. Best Buy posted year-over-year earnings growth of 32 percent in Q2 and has averaged 24 percent per year earnings growth over the last three years, Pendergraft said, but analysts project earnings growth of 16 percent in FY 2019. Sales have grown by an average 2 percent over the last three years, and Q2 sales grew 5 percent, he said. For the year, sales are forecast to grow 1.4 percent. Few stocks have jumped after their earnings reports in the current earnings season, said the analyst, noting Macy’s and Walmart both beat estimates but their shares fell. Seven of 25 analysts rate Best Buy a “buy,” 16 give it a “hold” and two rate it a “sell,” he said. It has been trending higher over the last few years despite slower sales growth, he said.
Billed as an effort to curb porch piracy, Sprint said Wednesday consumers can buy from its website or by phone and pick up the purchases at FedEx counters in Walgreens stores. Deliveries are held at Walgreens for five business days. It's the result of collaboration between the companies for Sprint Express sections in certain Walgreens locations.
Research firm eMarketer ratcheted up its holiday sales forecast Tuesday, eyeing the first $1 trillion-plus season benefiting from the maximum number of days between Thanksgiving and Christmas. Citing “low unemployment, strong income growth and high consumer confidence,” analyst Andrew Lipsman predicted 5.8 percent retail sales growth for the season, the highest rate since 2011. Noting “some economic headwinds,” Lipsman said effects will be muted until after the holidays as retailers, banking off built-up inventories of China-produced goods affected by tariffs, won’t pass on notable price increases to consumers until next year. Lipsman raised the forecast for brick-and-mortar retailers, which he now projects will have a 4.4 percent sales increase to $878.38 billion vs. the Q3 forecast of $863 billion. Although some physical store retailers shut storefronts this year, others are capitalizing on the “strong consumer economy” and will represent 87.7 percent of holiday sales, Lipsman said. Retailers are reeling in customers with remodeled stores, “streamlined checkout” and buy-online-pick-up-in-store options, he said. E-commerce, meanwhile, will continue to show the fastest growth among retailers, jumping 16.6 percent to $123.7 billion, said analyst Cindy Liu. She noted the emerging battle for market share among e-tailers using free and fast holiday shipping offers to compete against Amazon (see 1811050040). Mobile shopping from smartphones and tablets will jump 44 percent, reaching 5.4 percent of holiday sales, said Liu.
Amazon responded Monday to jabs from competitors Target and Walmart that they are implementing free shipping for the holiday season, with no membership required, by opening free shipping to its non-Prime members for the season. Amazon’s non-Prime members previously had to spend $25 to get free shipping, but now all Amazon customers will have access to free shipping “on orders that will arrive in time for Christmas,” said Doug Herrington, Amazon senior vice president-North American retail. Free shipping is available on “hundreds of millions” of items to all Amazon shoppers, but only Prime members are assured of the two-day time frame. Prime members also will get free same-day delivery on more than 3 million items: Those who place an order in the morning will receive eligible same-day orders “before bedtime” -- even on Sundays, it said, not specifying its customers’ bedtime. Prime members, who pay $119 annually or $12.99 per month for membership, were bumped up to one-hour delivery from Whole Foods Market in 60 markets, Amazon said. Consumers can expect free shipping deals from all the major retailers before and after Black Friday. Best Buy brought back free delivery for the holiday season with no minimum purchase or membership required (see 1810300041), and it’s offering same-day shipping on select products, for a fee, ordered before 3 p.m. local time (2 p.m. on Sunday). Best Buy's offers run through Dec. 25. Target also announced free two-day shipping to all customers on “hundreds of thousands” of products, no minimum purchase required. Walmart last month announced two-day shipping for “millions” of items through its marketplace sellers for the holiday season (see 1810230049), and it's making it easier for customers to return items sold by marketplace sellers, enabling shoppers to print a shipping label from home and bring it to a Walmart store for return beginning mid-month.
Bose and Sony’s XBR products are among the “expanded assortment” of products Walmart announced Tuesday for the holiday season. The retailer said it spent the past year expanding its assortment in stores and online to offer its “widest assortment of top gifts at the season’s best prices.” Other brands added to the Walmart vendor list are De’Longhi and Braun in the home products category. Walmart didn’t break out which Sony XBR products would fill the Walmart aisles but said they would launch mid-November. Sony sold 2.8 million TVs globally in Q2 ended Sept. 30, an 8 percent increase sequentially, but a 12.5 percent decrease from Q2 a year earlier, said the company Tuesday (see 1810300012). Sony didn’t respond to questions. The Walmart website showed Tuesday a comprehensive listing of Bose products, including $29 accessories and $99 speakers, going up to $1,398 for a SoundTouch 300 sound bar and Acoustimass 300 base module bundle. Bose didn’t respond to questions. Best Buy said Monday it’s bringing free shipping back for the holiday season with no minimum purchase or membership required. It’s also offering same-day shipping for an unspecified fee for products ordered before 3 p.m. local time (2 p.m. on Sunday) along with store pickup. The free shipping offer for all orders on its site runs through Dec. 25. Target said last week it will offer free two-day shipping to all customers on “hundreds of thousands” of products, no minimum purchase required. Like Best Buy and Walmart, Target noted its free shipping offer doesn’t require a membership, taking a poke at Amazon Prime. Target’s Drive Up service is now available in nearly 1,000 stores, enabling customers to place an order in the Target app and have purchases brought to their car by a team member within an hour, and to the car within two minutes of arrival in the parking lot, it said.
The 2019 holiday shopping season has begun, Localytics blogged Monday, urging clients to engage with their customers as much as possible to get them to frequent their ecommerce site or app. To keep customers “excited,” Justina Perro, senior content marketing manager, suggested promotions like “25 Days of Deals.” Some 87 percent of consumers say they look for deals while shopping and 71 percent say price is the biggest determining factor, Perro noted, but though “deals matter,” she advised retailers not to discount at just any price. An upsell strategy with “related recommendations” can offset discounts by pitching consumers during and after checkout, she said. Perro advised retailers to use mobile tools -- location-based, push and in-app messaging -- to target consumers on mobile devices, which are expected to generate more than half of all ecommerce purchases this holiday season. The marketer encouraged cart abandonment push notifications to drive shoppers back to an ecommerce app to complete a purchase. Localytics also advised retailers to take advantage of “Cyber Week II,” the week identified by advertising platform company Criteo as between Christmas and New Year’s Day, when consumers armed with gift cards and cash hit stores ready to spend for themselves. “Right after Christmas and before New Year’s, shoppers seem to be particularly interested in buying consumer electronics,” said Criteo, just before Christmas 2017, citing a “noticeable spike” in CE sales after the holidays. “Shoppers are comparing prices in November and finally clicking ‘buy’ after Christmas, when CE products go further on sale,” it said. Some 54 percent of CE purchases after Christmas are made on impulse, showing shoppers are open to buying products not on their list, it said.
Walmart took aim at Amazon and other competitors Tuesday with consumer-friendly two-day shipping and returns policy changes ahead of the holiday shopping season. The retailer is working with its marketplace sellers to make “millions” of items available for two-day shipping, it said, noting a membership fee isn’t required, making a dig at Amazon’s Prime membership that costs $12.99 per month or $119 per year. Customers returning an item from marketplace sellers can do so in a Walmart store or using a label they can print from home, it said. The customer packages the product for return, brings the item to a service desk at any of 4,700 Walmart stores and the retailer facilitates the return, with the customer receiving a refund from the seller, it said. In-store returns begin mid-November, it said. Last year, Kohl’s announced (see 1709190072) it would accept free returns for Amazon customers in 82 stores in Chicago and Los Angeles. Under the alliance, staffers at Amazon Returns at Kohl’s pack and ship eligible Amazon return items “regardless of return reason and regardless of whether the items are packaged for shipping.” Kohl’s CEO Michelle Gass said on the company’s Q2 earnings call in August the retailer added another 21 stores with Amazon Returns in the Milwaukee area during the quarter, calling it a “modest expansion.” Gass said Kohl’s is assessing the Amazon partnership, tracking the program closely while being “excited about the customer response.”
September electronics and appliance store sales increased 4.6 percent year over year and 0.9 percent sequentially from August, said the National Retail Federation Monday. Online and other non-store sales were up 8.9 percent year over year and 1.1 percent from August. Overall September retail sales jumped 3 percent year over year and 0.4 percent from August, said NRF, calling those results “somewhat softer than expected” due to the impact of Hurricane Florence and “geopolitical trade concerns.” NRF nevertheless is optimism about retail’s near-term future, it said: “Recent solid wage gains and other fundamentals continue to propel spending, which has been supported by tax cuts, saving and access to credit. Today’s numbers confirm an underlying strength in the industry and a solid trajectory as we go into the fourth quarter.”