AUDIO

Social Strategies Moving to Center Stage in Retail

BY CSA STAFF

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There’s no doubt about it: Consumers of all ages are becoming increasingly “social,” and how retailers respond to the trend will be critical to their businesses going forward. Sam Mukherjee, senior director, Fujitsu America, talks with Chain Store Age editor Marianne Wilson about why a social strategy is so important for retailers, offers tips for getting started and guidelines on how a retailer can differentiate themselves using a social platform.

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FINANCE

Hhgregg lowers guidance on lackluster video sales

BY Staff Writer

Indianapolis — In light of poor performance in its video category, electronics retailer Hhgregg has lowered its fiscal 2013 guidance.

Hhgregg is expecting net sales for its first quarter to be approximately $490 million, an increase of approximately 13.5% as compared with the $431.5 million of net sales reported in the fiscal first quarter last year. The company attributes the sales growth to the net addition of 30 new stores during the quarter.

The company expects its first quarter loss to widen to a range of $6.2 million to $5.7 million, or 17 cents to 16 cents per diluted share, from a net loss of $0.8 million, or 2 cents per diluted share.

Because of lower-than-expected revenues within the video category and greater expenses, Hhgregg expects same-store sales to be down 5.1%. This includes a 16.7% decline in the video category.

Dennis May, president and CEO commented, "Our sales results for the quarter are an indicator of the difficulty in the current retail environment, and more specifically the embedded volatility in the video industry. While we remain disappointed in our video results, we continue to make progress on our key initiatives of gaining market share in the appliances category, making strides toward stabilizing gross margin rates, and dynamically growing our e-commerce business. We remain committed to our model of competing on price and differentiating ourselves through service on big box consumer products. While big box consumer products today are defined as appliances and large screen televisions, we continue our plans to test new products that will help fill the void from sales declines in the video category. We continue to look for products that complement our consultative sales force, leverage our delivery and installation network, and utilize our private label consumer credit card."

In light of the preliminary fiscal first quarter sales results, Hhgregg now anticipates that annual net income per diluted share will be 90 cents to $1.05 in fiscal 2013. This compares with previous guidance of net income per diluted share of $1.12 to $1.27. Fiscal 2013 comparable-store sales are expected to be down 6% to down 4%, compared with previous guidance of negative 1% to positive 1%. Total sales for the year are now expected to increase 3% to 6%, as compared with a previous guidance of net sales increase of 9% to 12%.

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SUPPLY CHAIN

RILA warns of potentially devastating disruption

BY Ken Clark

New York — The Retail Industry Leaders Association (RILA) urged the International Longshoremen’s Association and the United States Maritime Alliance to reach a contract agreement well in advance of the Sept. 30 deadline in order to prevent a disruption to the flow of goods.

The ongoing labor negotiations affect 14 East and Gulf Coast ports, which together account for 95% of all containerized shipments to the Eastern seaboard.

“This potential disruption would be devastating to the retail industry as it would disrupt the flow of goods, resulting in lost sales and aggravated customers,” said RILA president Sandy Kennedy.

Ports play a critical role in the supply chain, and a potential disruption would be destructive to the retail industry’s ability to deliver their goods to consumers in a “just in time” fashion, according to RILA.

While a work stoppage would be the most harmful outcome, the letter reminded negotiators that if the parties fail to reach an agreement well in advance of the Sept. 30 deadline, retailers will be forced to redirect shipments in order to avoid an interruption in the flow of goods.

“[T]he absence of certainty over the outcome of the negotiations and facing the real possibility of a September stoppage, retailers have no choice but to continue planning for a shutdown. Indeed, some of our members advise that they are beginning to redirect their supply chains in order to allow adequate lead time to ensure that customer needs can continue to be met, regardless of whether the negotiations are successfully concluded by Sept. 30. Supply chain changes of this magnitude are not desirable to retailers because they take time both to implement and to reverse,” said Kennedy.

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