The closing and subsequent liquidation of the Circuit City chain this spring could be seen as a sign of serious trouble for all electronics retailers. But, as is so often the case, some companies see opportunity where others see disaster, and the upside in electronics may be in determining which regional companies can capture a share of the $10 billion in revenue that Circuit City had been generating each year.
The Circuit City bankruptcy left Best Buy (BBY) as the only large national electronics retailer. The chain, along with Wal-Mart (WMT), Target (TGT) and Amazon (AMZN) are considered most likely to fill the void with consumers. But a number of smaller, regional chains are also poised to grab a larger share of the market as well.
The overall sales figures from the latest U.S. Commerce Department retail sales report for April were not encouraging, showing that seasonally adjusted sales for electronics and appliance stores slipped 2.8 percent from March, and nearly 12 percent from a year ago. But, as quarterly earnings reports are announced for individual companies, there are some signs that retail electronics sales have been strong despite the weakened economy. Market research firm DisplaySearch reports that flat-screen TV sales, for instance, were up 23% over last year during the first quarter of 2009.
Best Buy reported a 9.7 percent increase in sales for the quarter ending Feb 28, though it saw a 23 percent drop in overall earnings. Conn’s (CONN), with 75 locations in the Southwest, reported a sales increase of 2.6% for the quarter ending April 30, while Midwestern retailer hhgregg (HGG) told the Wall Street Journal that it will report an year-to-year increase in sales of 13% for its fiscal fourth quarter when it announces results in June.
Conn’s, which operates retail stores in Texas, Louisiana and Oklahoma, saw growth in consumer electronics – 7.6 percent – than it did in its overall business. The chain opened seven new stores during the quarter.
Hhgregg, with 111 stores nationwide, ramped up its planned expansion in the last year, opening 20 stores rather than the 15 it had planned. It plans to take over Circuit City locations in towns such as Southhaven, MS and Johnson City, TN as it moves beyond its Indianapolis-based roots and into the South.
New England’s largest independent electronics retailer, Bernie’s, had announced fortuitously-timed expansion plans just last year. The nation’s 28th-largest electronics chain and has since opened one new location in the upscale Fairfield County region of Connecticut – its 15th store – and introduced a renovated prototype store it hopes to roll out to additional locations.
Closely-held P.C. Richard & Son now has 56 stores in the New York City area after acquiring six former Circuit City locations, and it too is moving aggressively into the demographically-appealing Connecticut suburbs.