Best Buy: Private Label

Fnac Q1/09

PPR has just released its results for Q109. Fnac saw year-on-year sales decline by a little over 4%, with the best results coming from Belgium and Brazil, and the worst results coming from Spain. In France - its biggest market - Fnac's sales were down by 4.5%, despite a 10%+ rise in online sales.

Logitech Q4/09

Logitech has just announced its Q409 results, with overall year-on-year sales down by 32% - 36% in EMEA, 33% in the Americas, and 14% in Asia. While it's clear that the economic downturn is the principal cause of this decline, Logitech say that de-stocking in the channel has been a significant contributor. This trend has been affecting pretty much all hardware suppliers in recent months, but presumably at some point equilibrium will be reached and the sell-in and sell-out numbers will once again become aligned. Only at that point will we really be able to see the true impact of the recession on demand.

Lexmark Q1/09

Lexmark has reported Q1 revenues down by some 20% compared to the same period last year. According to segment information recorded in Lexmark's Form 8K, revenues in the US were down 14%, in Europe they were down 23%, and elsewhere in the world, they were down 26%. Overall, hardware revenues declined by 30%, while supplies revenues declined by 16%.

Tesco 2008

Arcandor Restructures

Best Buy Reorganisation

In its latest press release, Best Buy describes itself as a 'people powered organisation'. It says that: "The company's Blue Shirt employees are the core of Best Buy. As a people-powered organisation, Best Buy invests heavily in discovering and training employees in customer service, product knowledge and financial acumen. As the store employees are closest to the customers, the company relies on them for their innovative ideas and feedback to enhance customers' shopping experiences".

But in a recent Associated Press piece that quotes Bernstein analyst Colin McGranahan's latest note on Best Buy, we learn that a new reorganisation program will lead to job cuts and lower pay for thousands of Best Buy's Blue Shirts. McGranahan estimates that some 1,000 salaried assistant store managers could be cut, and around 8,000 senior associates could receive pay cuts as they are demoted to more junior sales associate roles.

If we go back to March 2007, this type of action may seem all too familiar. Back then, Circuit City laid off some 3,400 of its highest paid sales associates, replacing them with lower paid - and lower skilled - employees. And we all know what happened to Circuit City.

Electro World

Electro World is DSGi's chain of some 36 superstores in Czech Republic, Hungary, Poland, Greece and Turkey. Last November, it was reported that the Eastern European stores were to be put up for sale. Now, there are suggestions in the local media that Slovak company Nay Elektrodom wants to buy these stores. Enterprise Investors took at 48% stake in Nay back in 2005, so presumably the funds can be made available if the business case looks good.

Bottomed Out?

Intel published its Q1 results yesterday. Year-on-year comparisons make for uncomfortable reading - revenues down by 26% and net income down by 55%. But, Intel's CEO, Paul Otellini, said: "We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns". Nevertheless, Intel declined to issue a formal revenue projection for Q2. 

Stalking Horse

Systemax has announced that it has signed a 'stalking horse' agreement to purchase various assets of Circuit City's eCommerce business for $6.5mn, plus a share of the revenues generated from the utilisation of those assets over a 30 month period. The 'stalking horse' process is, in principle at least, relatively simple, but it can be a legal minefield. What it does mean is that we will have to wait awhile to see if the sale goes through.

Systemax did something similar with CompUSA in early 2008.

CompUSA 2.0

Some 15 months ago, Systemax agreed to buy the CompUSA brand, trademarks, eCommerce business, and a handful of stores. This followed CompUSA's earlier acquisition by Gordon Brothers Group, a specialist 'restructuring' firm, back in December 2007.

Now, Wired blogger Priya Ganapati has posted a lengthy article about the resurrection of CompUSA stores. It seems as if there is an attempt to build a seamless multi-channel approach by the 'soft integration' of CompUSA's stores  with Systemax's Tiger Direct online business. What's not clear, though, is whether the physical stores act more as a showroom for product which is eventually bought online - whether that be from Tiger Direct or elsewhere.

Systemax trades as Misco in Europe.

Dark Forces

Today's FT reports on a recent circular by Redburn Partners' analyst Robert Miller. Miller says that: "We have long felt that two dark forces of the electricals industry - deflation and online attrition - made the off-line electricals leaders in the UK and France [DSGi and Kesa's Darty] uninvestable... there are fledgling signs that both of these dark forces may be neutralising". If Miller is correct, then this is very good news for European electricals specialists.

DSGi Nordic Closures

DSGi has announced that it will be closing 27 stores in Sweden and Finland. In Sweden it will shut all 8 PC City stores. In Finland, 19 of the Markantalo stores will be closed, with the remaining 4 stores converted into DSGi's other Finnish brand, Gigantti. Markantalo and Gigantti are part of Elkjop, the leading electrical retailer in the Nordics. DSGi acquired Elkjop in 1999.

Surcouf

Surcouf is a small outpost of the PPR empire. It's been up for sale for over a year, and now it appears to have found a buyer - Hughes Mulliez, a scion of the retailing family which owns majority stakes in Auchan, Boulanger and many other chains. Hughes Mulliez founded the electronics chain Youg's about 10 years ago. The holding company - L'Association Familiale Mulliez - makes the extended Mulliez family one of the richest in France.