Wal-Mart, Amazon, Costco Seen Benefiting From Circuit City
2009年1月21日 - 7:36AM
Dow Jones News
While Best Buy Inc. (BBY) is seen as the prime beneficiary of
Circuit City Inc.'s demise, retailers like Wal-Mart Stores Inc.
(WMT), Costco Wholesale Corp. (COST), Staples Inc. (SPLS) and
Amazon.com Inc. (AMZN) also stand to gain.
As much as 40% of sales that would have gone to Circuit City
will shift over to Best Buy, some analysts said. One analyst thinks
Best Buy is more likely to get 30%.
The amount, while in the billions of dollars, would have been
even greater if other retailers weren't getting as heavily into
selling consumer electronics and the makers of these products were
not eager to shift to newer channels.
There is a "substantial tailwind" for discounters, warehouse
clubs and Internet retailers to pick up market share this year as a
result of Circuit City's departure, said J.P. Morgan analyst
Christopher Horvers.
Recent comments by executives from Costco and Staples, as well
as Dell (DELL) and Hewlett-Packard (HP) show "an increasing push by
vendors to expand their retail partnerships," Horvers said.
Analysts have a wide range of estimated sales for Circuit City
this fiscal year, ranging between $6.5 billion and $8 billion. The
figures are hard to determine because of the acceleration of the
retail downturn.
Horvers said he thinks discounters, mass merchants and the
Internet will get 40% of business that would have gone to Circuit
City, Best Buy will receive 30% and 20% of it will just disappear
due to the overall consumer-spending slowdown.
Regional competitors like Conn's Inc. (CONN) in the Southwest
and hhgregg Inc. (HGG) in the Midwest to Southeast would be in line
for a big share of the remaining 10% of the business.
The beneficiaries could be hurt at first, if Circuit City
significantly lowers prices, and then their sales gains could
accelerate after the defunct retailer wraps up its liquidation this
spring.
Circuit City has about $1.3 billion in inventory.
This past weekend, after Friday's announcement by Circuit City
that it planned to liquidate after being unable to find a buyer in
time, sales signs at stores were offering only 10% off.
Consumers and investors were being given given a lesson in
liquidation, said Jack Williams, resident scholar at the American
Bankruptcy Institute and bankruptcy professor at Georgia State
University.
Sales typically start lower as the retailer thinks news of its
liquidation will spur business as buyers feel they are getting a
good "going out of business" price.
The next step could be Circuit City quickly closing stores on
which it was paying month-to-month rent and shipping that
merchandise to stores with longer leases, Williams said.
Discounts are almost certain to accelerate, but by how much will
depend on how well merchandise is moving.
As the price cutting continues, Circuit City isn't likely to
honor agreements it struck with vendors regarding how low their
products' prices could go, Williams said.
The vendors can either let the issue go or buy back the items as
a way of trying to recoup more money and keep peace with other
retailers that offer the product, analysts said.
Any items that Circuit City may have sold through a down
payment, with the rest of the payment due over time, will likely be
sold by the liquidators to a company that specializes in these
collections, bankruptcy attorneys said.
Circuit City's liquidation follows the worst holiday season for
retailers in generations.
Consumer spending continued to plummet, as U.S retail sales fell
in December for their sixth straight month, the longest span since
the data has been tracked.
Circuit City filed for Chapter 11 bankruptcy protection Nov. 10
after its vendors would not ship merchandise before receiving
upfront cash.
Circuit City said it planned to emerge from bankruptcy, but
smaller in size.
Now the company is ceasing operations, joining other bigger-name
retailers like Goody's Family Clothing, Linens 'N Things, Mervyn's
and KB Toys that have recently liquidated or announced plans to do
so.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com
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