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Post by unlawflcombatnt on Jun 20, 2007 21:04:39 GMT -6
2 major retailiers, Circuit City and Best Buy, showed significant 1st quarter declines. Circuit City sales declined 4.3% during the first quarter to $2.49 billion, from $2.6 billion a year ago. Circuit City actually lost $54.6 million during the 1st quarter. Best Buy also showed a -$0.33/share profit decline for the 1st quarter. Below are excerpts from the article titled Circuit City braces for a rough ride ahead, which elaborates on these declines. " No. 2 electronics retailer suffers deep second-quarter loss; expects sales volatility in coming months as it struggles with turnaround efforts amid sluggish TV sales.
By Parija B. Kavilanz,
Circuit City on Wednesday reported a steep first-quarter loss amid a big drop in TV sales and warned that it expects more sales volatility ahead as it charts a turnaround strategy.
Circuit City (Charts, Fortune 500), the No. 2 electronics retailer after Best Buy (Charts, Fortune 500), posted a loss of 33 cents a share for the quarter, compared to a 4 cents a share profit from a year ago.
Analysts had expected a loss of 32 cents a share, according to Thomson Financial.
Circuit City shares were marginally lower Wednesday ahead of the company's conference call with analysts to discuss its results.
Sales for the period fell 4.3 percent to $2.49 billion from $2.6 billion a year ago.
Sales at Circuit City stores open at least a year, a key measure of retail performance known as same-store sales, slumped 5.6 percent in the quarter, which the company blamed on double-digit declines in TV sales and sales of DVD players, camcorders and home audio and digital satellite radio products....
In Circuit City's case, the retailer is also struggling with numerous restructuring efforts - including the move, announced earlier this month - that it will replace 3,400 store workers with lower-paid employees in a bid to cut costs...." Still further details on Circuit City's and Best Buy's woes can be found in another article titled Circuit City has $54.6 million 1Q loss
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Post by Grapple on Jun 21, 2007 10:48:09 GMT -6
The problem is that both Best Buy and Circuit City don’t provide any value added for the additional cost of buying from them rather then on the internet. They have both either gotten rid of, or never had any employees who could give you accurate information so why bother going there and buying when you can check out reviews on the internet and then find the lowest price.
After all, all the stuff they sell is made in the same Chinese sweat shops.
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Post by Ken on Jun 21, 2007 12:26:24 GMT -6
Best Buy doesnt look all that bad but circuit city is horrible newsroom.circuitcity.com/releasedetail.cfm?ReleaseID=250073snip> The consolidated gross profit margin was 22.5 percent in the first quarter compared with 24.5 percent in the same period last fiscal year. Domestic segment gross profit margin decreased 204 basis points from the prior year, impacting the consolidated gross profit margin decline by 197 basis points, driven by a decrease in domestic segment extended warranty net sales as well as lower merchandise margins that were driven by a greater mix of lower-margin PC hardware sales. The greater mix of PC hardware sales reflects both strength in that business as well as below-plan sales in the television category. end snip< they are all selling the same crap. It smells like market saturation. I was in lin at the grocry store and could have purchased a new phone, televison or CD player. media.corporate-ir.net/media_files/irol/83/83192/root/roic.htm
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Post by rjfliberal07 on Jun 21, 2007 20:29:39 GMT -6
I totally agree that it seems like Americans just about own every electronic gadget there is to man and are consequently maxed out on Credit Cards. I see no need right now to by any more junk electronics unless something I have breaks down. As for Circuit City, serves them right for laying off those several thousand well trained and knowledgeable workers. I say good riddance to bad rubbish!
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Post by unlawflcombatnt on Jun 22, 2007 4:00:46 GMT -6
"The greater mix of PC hardware sales reflects both strength in that business as well as below-plan sales in the television category." they are all selling the same crap. It smells like market saturation. I was in lin at the grocry store and could have purchased a new phone, televison or CD player. The "greater mix" reflecting "strength in business" is also a bunch of "crap." Circuit City's sales are down, their profits are down, and their company is sinking. The pdf file for Circuit City was also very interesting. It gives all of the profits and sales statistics for Circuit City. (or at least the one's they're willing to share.) On a related note, it can be seen that Circuit City's profits from sales to the United States accounted for 95% of the total. So much for the U.S. having to "compete" for export markets, or the so-called value of "opening up" foreign consumer markets to American products. The biggest consumer market for American business and American Corporate multinationals is the consumer market of the United States. Our trade agreements have served no function other than to transfer production of American-purchased consumer goods to foreign foreign production facilities. Somehow American consumers are supposed to keep up production demand while wages from providing that production are reduced, eliminated, and transfered to a non-consuming foreign country. I guess it's all OK, as long as Americans can purchase production by borrowing enough money to make up for their declining wages (or absent wages).
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Post by judes on Jun 22, 2007 6:31:18 GMT -6
I guess it's all OK, as long as Americans can purchase production by borrowing enough money to make up for their declining wages (or absent wages). This can't be kept up for very much longer. Soon it's going to all come back to bite those greedy Corporate slime balls. The new CEO of Delphi was quoted as saying something to the effect of why should we hire engineers in the US when we can pay them much less in Mexico. I recently talked to one of those Mexican Engineers, and he told me they do not even make enough money to buy a car. They ride a company bus to work. Well there ya go, as soon as all the good paying jobs are gone, there will be noone here either who is able to buy a car. Say goodbye to auto sales and company profits (although I'm sure executive bonuses will be the last thing to go.)
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Post by rjfliberal07 on Jun 22, 2007 22:37:06 GMT -6
The only way the Chinese can buy American made products is if either their currency goes higher versus the dollar and or Chinese per capita income grows enough to afford basic American goods. I doubt this will happen. If it happened like this, we would not be in this mess with Outsourcing of American Jobs. The only true winner here is the Multinational Corporations.
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Post by Ken on Jun 23, 2007 10:45:39 GMT -6
to be honest i don’t know how the Chinese laborers are treated and if there is a growing middle class. I hear from both sides on this.
We know that the peg has exacerbated the trade surplus with the US but if the currency strengthens it will, in the short run, fuel their appetite for raw materials driving global inflation higher. That means we will have to have some real innovation.
Imagine what will happen to Wal-Mart and the multitude of other US retail business models that rely on the peg to buffer margins.
We simply waited too long to address the issue and why/ Wall Street. Higher Stock Prices = Greater Economic growth.
The demand for US treasury and consumer debt will keep market rates and mortgage rates low driving more money into stocks. Forgetting the fact that the added demand for that debt is artificial.
The other piece in this puzzle is that the Euro zone has shown surprising reliance despite the US slowdown to near recession levels in terms of GDP. I cannot help to believe that the growth in this region is well balanced real economic growth. Even the rise of Sarkozy in France has to be an unwelcome sight for the US. Bringing pro-labor left into balance with capital and lowering taxes will initially drive debt into the markets. Ultimately this will lead to a "who will offer the best yield to the loaner" game between G8 rivals. As of now debt service is 9% of expenditures in the US. Any higher will only create a greater crisis at the retirement of the baby boomers. Of course we already know they will use the same tools they have been using for years. Monetization! Fire up the presses boys and damn the torpedoes!
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