Washington, D.C.
(April 4, 2007)
-- Circuit City today said it lost $12.2 million in the
fourth quarter thanks largely to dropping flat-screen
HDTV prices.
However, Best Buy today reported that its fourth quarter net revenue jumped 18 percent.
The reason: Consumers' apparent insatiable demand for flat-screen HDTVs.
What's the difference?
Best Buy was able to exploit the demand for flat-panel sets by offering fewer discounts than rival retailers, according to Bloomberg News.
However, Circuit City fell victim to the rush to compete with discounters like Wal-Mart and Costco who dramatically slashed HD prices during the holidays. But it appears the CE retailer may have dropped prices too much.
"Fourth-quarter sales growth was somewhat less than we expected," Philip J. Schoonover, Circuit City's CEO, said in a statement. "Flat panel television average selling prices were well below the prior year."
However, Best Buy today reported that its fourth quarter net revenue jumped 18 percent.
The reason: Consumers' apparent insatiable demand for flat-screen HDTVs.
What's the difference?
Best Buy was able to exploit the demand for flat-panel sets by offering fewer discounts than rival retailers, according to Bloomberg News.
However, Circuit City fell victim to the rush to compete with discounters like Wal-Mart and Costco who dramatically slashed HD prices during the holidays. But it appears the CE retailer may have dropped prices too much.
"Fourth-quarter sales growth was somewhat less than we expected," Philip J. Schoonover, Circuit City's CEO, said in a statement. "Flat panel television average selling prices were well below the prior year."
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Analysts also said Best Buy has been able to steal customers from Circuit City by opening new stores in hot locations and launching home installation services.
Best Buy said sales rose 21 percent in the last quarter, the sharpest increase in three years.
"`Best Buy is winning,'' Tim Allen, an analyst with Jefferies & Co. in New York, told Bloomberg. "The stores are newer and in better locations and they show more faith in their employees. It's a friendlier vibe and it seems like Circuit City's playing catch-up.''
Bloomberg reports that Best Buy plans to further boost sales by expanding its home installation division. So even if flat-screen prices continue to drop, the company will generate extra revenue.
Mike Vitelli, a Best Buy senior vice president, reported in December that flat-panel prices dropped 25 percent last year. However, he said there is still room for growth with high-def sets in only about 25-30 percent of U.S. homes.
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Analysts also said Best Buy has been able to steal customers from Circuit City by opening new stores in hot locations and launching home installation services.
Best Buy said sales rose 21 percent in the last quarter, the sharpest increase in three years.
"`Best Buy is winning,'' Tim Allen, an analyst with Jefferies & Co. in New York, told Bloomberg. "The stores are newer and in better locations and they show more faith in their employees. It's a friendlier vibe and it seems like Circuit City's playing catch-up.''
Bloomberg reports that Best Buy plans to further boost sales by expanding its home installation division. So even if flat-screen prices continue to drop, the company will generate extra revenue.
Mike Vitelli, a Best Buy senior vice president, reported in December that flat-panel prices dropped 25 percent last year. However, he said there is still room for growth with high-def sets in only about 25-30 percent of U.S. homes.
Click TVPredictions.com to see today's Swanni Sez.
© TVPredictions.com
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Phillip Swann is president and publisher of
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Times, The Associated Press and The Hollywood
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