Weak September CE Sales Reported by BJ’s, Target, Costco

BJ’s Wholesale Club and Target on Thursday reported weak September CE sales, one day after Costco also cited weakness in the category for Q4 ended Aug. 29 and for September. Warehouse clubs BJ’s and Costco each singled out continued soft TV sales. Target said its weak September CE sales included videogame products.

Sales of TVs and packaged, pre-recorded video were weaker in September than in September 2009 for BJ’s, it said. But overall sales for the month grew 3.6 percent from a year ago to $961.6 million, with overall comparable club sales up 1.5 percent. Sales were up from September 2009 in weeks one through four, with the strongest increase in week three, it said. Sales were down in week five from the comparable week last year. Comparable club sales grew in the Mid-Atlantic, Southeast and upstate New York regions but fell in metro New York and New England, it said.

Overall hardlines were down in the “mid single-digit range” in September for Target from September 2009, with “the softest performance in electronics,” including videogames, it said in its monthly, pre-recorded sales results call. Also weaker than September 2009 were sales of music, movies and books, it said. But Target said overall sales for the five weeks ended Oct. 2 grew 3.1 percent from the comparable period last year to $5.56 billion. Same-store sales grew 1.3 percent. Sales came in “near the low end of our expectations,” said CEO Gregg Steinhafel. The retailer will also finish its 2010 remodel program this month, allowing it to enter Q4 with “no stores under construction” and its new PFresh layout in 462 stores, he said. Target expects to gain market share “profitably in the upcoming holiday season,” he said. Separately, Target said it “will discount prices on more than 1,000 toys” this holiday season. It was an early sign that it will wage an aggressive battle in the category with Wal-Mart.

Costco’s overall hardlines sales grew in “low single digits” in Q4 and were “slightly positive” for September compared to the same periods last year, Chief Financial Officer Richard Galanti said in a Wednesday earnings call. There was weakness in majors, which includes CE, in Q4, with “a big chunk of that” related to “what’s going on with televisions,” he said. Majors were down in the “high single-digit range” in September, with TV revenue and units down in the “low double-digit range,” he said. One major problem was “there were not a lot of promotions” of $100-$300 off the price of a flat-screen TV available “over the last several months” in the U.S., he said. “That’s starting to turn” around, “not to where it was” a while back, “but a lot better than it has been,” he said, predicting improvement in November and December. The lack of any “great, exciting things” in new videogame products, such as a new console didn’t help, he said. Costco doesn’t yet have Apple’s iPad and doesn’t expect to get it by Christmas, he also said.

Costco’s Q4 sales grew 8 percent from Q4 last year to $23.59 billion, while sales for the fiscal year increased 9 percent to $76.25 billion, it said. Q4 profit grew to $432 million, 97 cents per share, from $374 million, 85 cents, in Q4 last year. Profit for the year widened to $1.30 billion, $2.92 per share, from $1.09 billion, $2.47, in fiscal 2009. Overall September sales increased 10 percent from September 2009 to $7.51 billion.

Costco opened 13 warehouse clubs in the fiscal year, 10 in the U.S., two in Canada, and one in the U.K., Galanti said. It plans to open 29 -- 16 in the U.S., this fiscal year, he said. It has opened one club since Aug. 29, in San Diego and will open seven by the end of Q1 -- one each in Maryland and Alberta, Canada, two in Georgia and three in the Chicago area that will boost the total to 17 in that market, he said.

Costco’s e-commerce business is a “nice, profitable” one and that business “should be a $5 billion business down the road,” Galanti also said. But he said it isn’t clear when Costco will reach that target. The company will build that business “in a methodical way,” but Costco’s expansion outside the U.S. is now more significant for it, he said.