GameStop remains focused on a “transformation plan” to grow its non-gaming business, evaluate store closures and execute “financial discipline,” said CEO Paul Raines in a Friday 8-K SEC filing, as sales at the company dropped 16.4 percent to $2.5 billion for the nine-week holiday shopping season ended Dec. 31. In the most recent earnings report, Raines highlighted GameStop’s diversification into digital, technology brands and collectibles to offset expected declines in game sales. The retailer's same-store sales in the holiday season fell by 18.7 percent, but the chain cited improvement from November (minus 26.6 percent) to December (minus 13 percent) that it expects to carry through January. Raines blamed lower results on “industry weakness, promotional pricing pressure and slower in-store traffic.” In its shrinking game segment, hardware revenue plunged 30 percent on a bigger-than-expected decline in PS4 and Xbox One sales, and sales of new video game software sank 23 percent, it said. GameStop's collectibles business grew 27 percent to $177 million, driven by Pokémon products, and technology brands revenue grew 44 percent to $192 million for the holiday period, driven by “strong sales” of the iPhone 6s, iPhone 7 and Samsung Galaxy 7 smartphones, it said. GameStop shares closed 8 percent lower Friday at $22.74.
Hhgregg shares plunged 41 percent Tuesday to close the day at 78 cents after the retailer released a disappointing holiday sales report. In a preliminary sales release Monday, the company projected Q3 FY 2017 sales of $453 million, a 24 percent drop from the year-ago quarter. Comparable store sales fell 22 percent, and CE sales plunged 39 percent year on year, it said. Sales of appliances and home products, which the retailer positions as growth categories, dropped 4 percent and 9 percent in the quarter, it said. CEO Robert Riesbeck attributed results to “competitive pressures in the market, specifically in consumer electronics as it is a larger mix of our business during the holidays.” The retailer’s transition to a new distribution center also had a “temporary negative impact” on sales in the quarter, Riesbeck said. Hhgregg cautioned about a $7 million-$12 million non-cash charge for “asset impairment” of certain locations in the December quarter based on trends in underperforming markets that aren't expected to recover. “We are pleased with our investments made to shift our focus from consumer electronics to appliances and furniture,” said Riesbeck, citing the company’s earlier decision to “compete less in this category, particularly at the entry level price points.” He said the retailer will focus on appliances and home products, while continuing its strategy to “reposition our consumer electronics business to focus on the premium models." It will hold its Q3 earnings call Jan. 26.
The consumer is changing, “demanding something different, and retail must answer this call in 2017 or accept the loss,” said NPD analyst Marshal Cohen in a blog post. Consumers don’t want to acquire more stuff; they want to "do more stuff," and over the year they’ll be aggressive about spending on experiences “at the expense of product,” Cohen said. To compete with spending on travel, adventure and spa visits, manufacturers will need to come up with products that excite consumers, and retailers will have to step up the in-store shopping experience, he said. Cohen called the idea of an omnichannel retail approach “dead,” saying retailers need to be more focused and personal as they create a sense of connection with consumers. The “Made in the USA” movement, in the background of retail product marketing, will take a “significant step forward” in consumer responsiveness and become part of the “marketing DNA” of a product, said Cohen. He stopped short of saying USA-made products will be the new sales leaders, but predicted companies with domestic production will “shout it from the rooftops and consumers will be listening.” Price wars aren’t going away “anytime soon,” said Cohen: Consumers will be looking for convenience, ease and timeliness when shopping, but price will dominate the purchase decision as “deals and sales are going to be a prominent retail player in 2017.”
Holiday season retail spending grew 12 percent online and 1.6 percent in stores over 2015, said a Monday First Data report tracking sales for the 66-day period through Jan. 2. Electronics posted some of the highest gains, at 13.2 percent in e-commerce and 7.1 percent in stores during the holiday season, said First Data, attributing the higher in-store growth for electronics to consumers’ preference for wanting to try products before they buy. Average retail ticket size inched up 1.1 percent for the holiday season, with electronics tickets flat, increasing 5 cents over 2015, it said. Electronics and appliance retail sales advanced 1.8 percent for the period from January through October and an average 8.5 percent (brick and mortar and online) during the holiday season, it said. Same-store sales data were based on point-of-sale activity at 942,155 merchants.
November estimated electronics and appliance store sales dropped to $10.1 billion from $10.4 billion in November 2015, said a Commerce Department report Wednesday. Electronics and appliances stores’ sales increased 0.1 percent seasonally adjusted over the previous month and fell 2.5 percent unadjusted year over year, it said. Overall retail sales -- excluding automobiles, gas stations and restaurants -- were up 0.1 percent from October and 5 percent year over year, it said. Online and other non-store sales grew 15.3 percent year over year, reflecting the growth of online shopping, said a National Retail Federation report. “Consumers were able to take advantage of low prices throughout the first half of the holiday season, checking out with full baskets but paying less even though purchasing was up,” said NRF Chief Economist Jack Kleinhenz.
Conn’s FY sales for Q3 ended Oct. 31 fell 4.5 percent to $308.4 million, said the company in a Tuesday earnings release. Its net loss widened to $3.8 million, from $2.4 million in the year-ago quarter. Consumer electronics revenue, 21.3 percent of the mix, sank 6.5 percent, and same-store CE sales dropped 9.9 percent, it said. CE unit volume tumbled 12 percent, partially offset by a 7 percent bump in average selling prices (ASPs). TV sales tapered off 5.7 percent on a unit volume decrease of 12 percent that was buoyed by a 6.7 percent rise in ASPs during the period, Conn’s said. The company opened a Conn's HomePlus store in North Carolina during the quarter, its 10th opening of the fiscal year, bringing the total store count to 113. Conn's plans to open three stores in FY 2018. For Q4, the retailer guided to a same-store sales drop of 10 percent.
Walmart’s Q3 FY 2017 revenue was up 0.7 percent to $118.2 billion, said the company in a Thursday earnings release. Traffic in U.S. stores grew by 0.7 percent over the year-ago quarter, leading to a 1.2 percent rise in comparable store sales for the quarter ended Oct. 28. U.S. net sales grew 2.5 percent vs. the year-ago quarter to $74.5 billion, it said. Walmart's global e-commerce revenues, following the completion of its Jet.com purchase in September, jumped 20.6 percent over Q3 last year, said the company. The retailer expects a comp store sales increase of 1.0-1.5 percent for the quarter ended Jan. 27. Shares closed down Thursday 2.2 percent to $69.18.
Office Depot shares were 15.1 percent higher Wednesday at $3.51 after the chain said it plans to exit international operations altogether to focus on the North American market, after its September announcement it plans to sell its European business to Aurelius Group. On the company’s Q3 earnings webcast Wednesday, Office Depot Chief Financial Officer Steve Hare said it made the decision to sell “substantially all” international operations and wants to offload businesses in Australia, New Zealand, South Korea and China that together generate about $600 million annually. Office Depot plans to retain its sourcing and trading operations in Asia, Hare said. The North American business is the core of the retailer’s three-year strategic plan to achieve profitable growth, he said. Part of that plan is to “reinvent” its retail business, whose Q3 revenue fell to $1.5 billion, down 8 percent year over year, due to lower sales in ink, toner and computers, lower average order value and a “very competitive” 2016 back-to-school sales season, Hare said. Comparable store sales decreased 2 percent. Office Depot closed seven stores in the quarter, bringing the number of North American stores to 1,506, and it plans to shutter 65 stores in Q4 and 300 over three years, he said. In Q3, Office Depot converted 15 stores to a smaller 15,000-square-foot footprint, vs. previous layouts of 20,000-30,000 square feet, said CEO Roland Smith. Under the new format, the company eliminated a third of “slow-moving” and lower margin SKUs, while adding higher quality, higher margin “curated” products, Smith said. It redesigned stores to make them easier to navigate and dedicated “considerable" space to copy, print and technical services. The company's Q3 sales fell 7 percent to $2.8 billion, and earnings rose to $44 million from $6 million. Smith said Office Depot is “recovering quickly from the disruption caused by the protracted Staples acquisition attempt,” he said. Office Depot and Staples announced the termination of the merger agreement in May after a U.S. district judge in the District of Columbia granted the Federal Trade Commission's motion for an injunction blocking the deal. Office Depot forecast lower revenue in Q4 due to the impact of store closures, contract customer losses during the Staples acquisition attempt and continued "challenging market conditions."
Walmart will offer a new Roku 32-inch HDTV for $125 in November and December, the same price as its Black Friday Roku doorbuster from last year, the retailer said in a Thursday news release outlining some of its holiday shopping plans. As part of an early kickoff to holiday season, Walmart launched “thousands” of new rollbacks that will be available from the first weekend in November to Black Friday, Cyber Monday and the final shopping weeks in December, it said. To help customers find exclusive offers at Walmart.com, the retailer will feature a top 20 list of products to help customers find products “they wouldn’t expect to find at Walmart." In store, Walmart is adding “holiday helpers,” who beginning Nov. 4 will help customers get through the checkout process faster, it said. That includes finding the shortest line, opening registers as needed or picking up items customers might have forgotten.
GameStop instituted a layaway plan for select products to make it easier for consumers to buy higher ticket items, it said in a Tuesday announcement. Customers can reserve select videogame consoles, headsets and hard drives through the layaway program with a $25 minimum deposit through Dec. 16. Layaway products must be paid off and picked up at the store location where the original deposit was made by the end of operating hours Dec. 21, GameStop said. Products covered under the layaway program include PS4, Xbox and Nintendo consoles, bundles and controllers; Sony, HyperX, Turtle Beach, LucidSound and Astro Gaming headsets; and PS4 and Xbox hard drives.