Best Buy, Roku, Apple Shares Rebound Following Tariff Delay

Shares of Best Buy, Roku, Apple and other consumer electronics retailers/manufactures rebounded after President Trump delayed until Dec. 15 a proposed new 10% tariff on cellphones, laptop computers, video game consoles and other goods manufactured in China.

The tariff on $300 billion worth of products, which Trump announced Aug. 1 as part of ongoing trade tensions with the world’s No. 2 economic power, would have been on top of an existing 25% tariff Trump previously imposed on $250 billion worth of other Chinese goods.

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The delay came after intense lobbying efforts in the nation’s capital convinced administration officials the new tariff could have serious implications to the U.S. economy entering the fourth quarter.

“Just in case they might have an impact on people … what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,” Trump told reporters on Aug. 13.

The news was welcomed by Wall Street, which saw shares of Best Buy, Apple and Roku rise 6.5%, 4% and 1%, respectively.

Roku is one of the largest manufacturer of Internet-connected televisions, with many originating from China.

But to the Consumer Technology Association trade group, delaying proposed tariffs only prolongs market uncertainty and impacts consumers 401(K) pension or retirement accounts, among other issues.

“Retaliatory tariffs are bad economic policy in the short and long term,” Gary Shapiro, CEO of the CTA, said in a statement. “The administration’s legally dubious trade war is compromising America’s global leadership.”

Previously-announced tariffs starting Sep. 1 will affect $52 billion in consumer technology products, and the tariffs starting Dec. 15 will affect $115 billion in products. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, according to the CTA.

“Tariffs are taxes,” Shapiro said. “The Chinese government doesn’t pay for them – Americans bear the burden. And next month, we’ll begin to pay more for some of our favorite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

Best Buy Widens Q1 Entertainment Sales Decline

Christmas is officially over. The post-winter holiday blues hit Best Buy entertainment sales with a thud.

The nation’s largest consumer electronics retail chain May 23 reported a 12.7% drop in same-store entertainment sales to $424 million for the quarter ended May 4. The business unit includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment sales declined less than 1% to $504 million in the previous-year period.

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International entertainment sales dropped 14% to $33 million, compared to an 8.3% decline to $41.8 million in the previous-year period.

Overall, Best Buy upped domestic operating income 24.3% to $332 million from $267 million last year. Revenue upped less than 1% to $8.48 billion from $841 billion.

The largest comparable sales growth drivers were appliances, wearables and tablets.

Domestic ecommerce revenue of $1.31 billion increased 14.5% on a comparable basis primarily due to higher average order values and increased traffic. As a percentage of total domestic revenue, online revenue increased to 15.4% versus an increase to 13.6% last year.

On June 11, CEO Hubert Joly transitions to the newly created position of executive chairman. CFO and strategic transformation officer Corie Barry becomes Best Buy’s fifth CEO and first female chief executive.

Joly appears to relish the transition from day-to-day operations to cushy board oversight.

“I am very proud of the seamless transition we have decided to implement, as it reflects positively on our momentum as well as our focus on executive development and succession planning,” Joly said in a statement.

Best Buy Ups Corie Barry to CEO, Hubert Joly to Executive Chairman

Best Buy April 15 announced that its board of directors has elected Corie Barry, currently the company’s CFO, to become CEO, effective following the company’s annual meeting of shareholders on June 11.

At that time, current CEO Hubert Joly will transition to the newly created role of executive chairman of the board.

Barry – Best Buy’s first female top executive – will also join the board of directors, which will expand to 13 directors.

Separately, COO Mike Mohan was promoted to president and COO, while Best Buy searches for a new CFO.

Corie Barry

Since joining Best Buy in 2012, Joly has led the company through a successful transformation in the ecommerce era, including improved customer satisfaction, market share gains, comparable sales growth and improved margins, while achieving $1.4 billion in cost reductions.

In fiscal year 2019, Best Buy essentially delivered on its fiscal 2021 revenue and operating income targets two years ahead of schedule and returned $2 billion to shareholders through dividends and share repurchases.

As executive chairman, Joly will continue to lead the board while advising and supporting the CEO on key matters, such as strategy, capability building, M&A and external relationships.

In addition, he is expected to assume certain responsibilities at the request of the CEO, in areas like government affairs, community relations and leadership development.

Hubert Joly

“We have a tremendously talented, deep and dedicated leadership team at Best Buy,” Joly said in a statement. “Corie has played a critical role in developing and executing the proven growth strategy in place today, and I am confident she has the vision, skills, experience and leadership capabilities necessary to be our CEO.”

Barry joined Best Buy in 1999 and has held a variety of financial and operational roles within the organization, both in the field and at the corporate campus. She became CFO in 2016 and, prior to that, served as the company’s chief strategic growth officer.

Barry has also served as SVP of domestic finance and as the interim leader of Best Buy’s services organization.

“I am deeply honored to have been selected as Best Buy’s next CEO and look forward to working closely with Hubert, our board, and the exceptional Best Buy family to continue the momentum we have been able to achieve,” said Barry. “Today’s technology and consumer landscape creates tremendous opportunities for Best Buy to further expand and deepen relationships with our customers and employees, while continuing to deliver shareholder value.”

Prior to Best Buy, Barry worked at Deloitte & Touche. She holds bachelor’s degrees in accounting and management from the College of Saint Benedict, where she also serves on the board of trustees. Additionally, she serves on the board of directors for Domino’s Pizza.

Mohan’s responsibilities include oversight of all customer channels for Best Buy’s domestic business including retail, e-commerce and customer experience, services, home, and Best Buy Business. In addition, he leads category management, merchandising, marketing, supply chain, and real estate for Best Buy’s core U.S. business.

He joined the retailer in 2004 as VP of the digital imaging business group and has assumed additional responsibilities throughout his career across nearly all of Best Buy’s product and business categories. He has overseen the launch of thousands of store-within-a-store locations in partnership with leading technology vendors, the expansion of Best Buy’s own Magnolia and Pacific Kitchen & Home brands, the evolution of the company’s private-label brands, and the rise of emerging categories, such as 4K UHD TVs, health and fitness devices, and connected home products.

Before joining Best Buy, Mohan was VP and general merchandise manager for Good Guys, an audio-video specialty retailer that operated 79 stores in the western United States.

Mike Mohan

“Hubert has done a tremendous job leading Best Buy’s turnaround, assembling a deep team of talented leaders and instilling a clear strategy for future growth and lasting success,” said Russell Fradin, the board’s lead independent director. “As a board, it is important to build on this strong foundation by implementing a thoughtful succession planning process. We are confident that Corie and Mike are perfectly suited to continue working with Hubert and the rest of the management team to build on our success and drive Best Buy into the next phase of its transformation.”

 

 

LG Announces Sound Bar Lineup for CES

LG Electronics announced a new 2019 sound bar lineup to be showcased at CES 2019.

The bar lineup is equipped with artificial intelligence and features two CES Innovation Award recipients (models SL9YG and SL10YG), according to an LG press release. LG’s premium SL9 took home the Best of Innovation title, the company announced.

LG models SL10YG, SL9YG and SL8YG were created in collaboration with Meridian Audio.

“The collaboration goes far beyond basic fine-tuning or the adoption of feature-sets, with both companies joining forces to engineer sound delivery for a truly unrivalled listening experience,” according to the release. “Drawing on 25 years of experience as the Master of Digital Signal Processing, Meridian’s Bass & Space technology improves the soundstage and envelops listeners in rich, uncompromising sound and strong bass. Together with its Image Elevation technology, designed to lift the soundstage in a more lifelike way to boost listeners’ sense of immersion, Meridian creates a true cinematic experience, delivering powerful surround sound like no other.”

Able to up-mix two-channel audio to multiple, distinct channels without generating any distortion, the Meridian Upmix technology increases sound immersion by improving the sound field while upgrading the clarity of vocals and lead instruments, according to LG.

LG’s sound bar models SL10, SL9 and SL8 support both Dolby Atmos and DTS:X. Users can add the Wireless Rear Speaker Kit (sold separately) to achieve a more cinema-like experience, according to LG.

The new sound bars also offer AI smart connectivity and voice recognition with the built-in Google Assistant. Users can control their LG sound bar and get information with a command such as, “Hey Google, increase the volume,” or, “Hey Google, what artist is playing?” Compatibility with Google Assistant-enabled smart products make it possible to control connected devices throughout the home via voice command. Users can say, “Hey Google, ask LG to turn on the air purifier,” to the sound bar to make adjustments.

The sound bars “have a sleek, understated design that perfectly matches the chic style of LG’s exceptional OLED TVs,” according to LG. At 57mm (2.25 in) deep, the LG SL9 can also be installed flush to the wall. An integrated gyroscope sensor gauges the position of the product (fixed to a wall or on a flat surface), adjusting sound directionality to guarantee the optimal listening experience, according to LG.

“LG’s 2019 sound bars deliver amazing performance tuned in close partnership with Meridian Audio with the convenience of smart AI connectivity,” said Kim Dae-chul, head of LG Home Entertainment Company’s audio and video business. “The high-quality sound and versatility of our newest lineup takes home entertainment to a whole new level and satisfies a growing demand for premium sound bar solutions that provide impressive listening experiences, greater convenience and stylish, modern aesthetics.”

IHS: Shipments of Larger-Size TV Screens Increase

Size matters when it comes to high-definition televisions.

Despite flat TV shipments in the most-recent fiscal period, the average TV unit-shipment screen size increased more than any previous quarter in the past year.

Global shipments of 60-inch and larger TV screen sizes increased more than 40% year-over-year, with even stronger growth in North America and emerging markets, as prices fell to new lows for 65-inch and 75-inch units, according to new data from IHS Markit. The growth rate is more than 10% higher than in recent quarters.

While promotions for the World Cup raised TV unit sales more than 7% in the first half of the year, Western Europe, Latin America, and Middle East and Africa all experienced double-digit TV shipment year-over-year declines in the third quarter.

“Each year during the holiday shopping season, brands and retailers try to push ever larger screen sizes to keep revenue growing and encourage adoption of value-added features like 4K and smart TV,” Paul Gagnon, research and analysis executive director, IHS Markit, said in a statement.

“This year, there’s higher interest in 65-inch 4K TVs for many of the key promotional deals, leading to less focus on smaller screen sizes under 50 inches.”

IHS said expanding screen sizes bodes well for sales of 4K units. In fact, the share of 4K TV shipments in Q3 reached a record high of nearly 44%. Due to sustained premiums and larger average size, 4K TV made up more than 71% of all TV revenue during the quarter.

Prices of 65-inch 4K LCD TVs fell to an average of $1,110 in North America during the quarter, from $1,256 in the previous quarter. In China, the average price of 65-inch TVs was even lower – just $928, after already falling below $1,000 in the second quarter. Xiaomi and other brands have aggressively pushed prices lower as competition intensifies in China. In other regions, prices were considerably higher for 65-inch 4K TVs, due to less intense retail competition and a smaller addressable market.

LCD TV shipments increased by 14%, quarter over quarter. Quantum dot LCD TV shipments rose to 663,000 units in the quarter, with an average size exceeding 60-inches. The average size of OLED TVs increased to more than 59 inches for the first time, as the 65-inch shipments share grew to a new high of more than 38%.

British Ditching DVD Players?

Heading into last week’s Black Friday retail weekend in the United Kingdom, tech shoppers apparently weren’t looking for DVD players, desktop PCs and MP3 devices.

New data from Ofcom, U.K.’s communications regulator, found that 64% of consumers shopped for a DVD/Blu-ray Disc player in 2018 – down from 83% in 2008. Another 27% bought a MP3 player, compared to 44% in 2008. Less than 30% bought a PC, down from 69%.

“As technology evolves and transforms how we live our lives, the devices we rely on are constantly changing,” Ian Macrae, director of market Intelligence at Ofcom, said in a statement. “The growth in popularity of streaming services has created tremendous demand for connected TVs, which for many people are replacing DVD players, and the smartphone is replacing several other devices at once.”

While smartphones (78%), smart TVs (42%) and wearables (20%) have increased in popularity among British shoppers, connected DVD/Blu-ray players affording physical and digital access still resonate.

In fact, excluding the ubiquitous smartphone, DVD/Blu-ray Disc players still top tablets, E-readers, digital video recorders, smart TVs and wearables on consumer purchases in 2018.

With Netflix favored by 44% of 765 million people globally who use an over-the-top video service, according to eMarketer.com, connected disc players remain an important conduit linking the living room TV with the Internet.

Indeed, through 2022, consumer spending on traditional home video and pay-TV will decline less than 2% to $11.5 billion, according to consulting firm PricewaterhouseCoopers (PwC).

 

Best Buy Ups Q3 Same-Store Entertainment Sales

Best Buy is looking good heading into Black Friday (Nov. 22).

The CE retailer Nov. 20 reported 12.4% increase in third-quarter (ended Nov. 3) same-store entertainment sales, compared to 4.1% increase in the previous-year period.

The entertainment segment, which includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated 6% ($525.3 million) of Best Buy’s domestic revenue in the quarter compared to 6% ($509.5 million) last year.

Internationally, entertainment same-store sales increased 10.8%, generating $58.4 million (7%) of revenue. That compared to 7.8% increase and revenue of $49.7 million (6%) last year.

Best Buy’s legacy CE unit saw 3.7% increase in domestic same-store sales, up from 3.5% increase last year. Revenue remained relatively flat at $2.71 billion compared to $2.63 billion last year.

The nation’s largest consumer electronics retailer remains upbeat heading into Black Friday and the winter retail season.

“The holiday season is here, and our team has put together a best-in-class assortment, prepared an amazing set of deals, and ensured we have great inventory availability across all the product categories we carry,” CEO Hubert Joly said in a statement. “In addition, we have continued to enhance our digital shopping experience and further improved our shipping speed, allowing us to delight customers with fast and free delivery.”

 

Facebook Launches Smart Speakers with Video Option

Facebook Oct. 8 bowed a wireless smart speaker – dubbed Portal – which enables users to make video calls, access music and Facebook Watch over-the-top video streaming, among other features.

The Portal and Portal+ versions retail for $199 (10-inch screen) and $349 (15.6 inches), respectively, and will begin shipping in November.

Using artificial intelligence technology, the Portal’s camera feature recognizes body shapes and allows callers to stay in the picture frame while movie around. The devices also enable Facebook Messenger users to make conference calls.

“Our goal is to make you feel present in the same space as the person on the other end,” Rafa Camargo, a VP at Facebook, said in a statement.

With more than 30% of American households owning smart speakers, another 16% plan to purchase them, according to Adobe Analytics.

The global smart speaker market grew 187% in the second quarter 2018 with shipments topping 16.8 million, according to Canalys. Google led with 5.4 million Home model unit shipments, followed Amazon with 1.4 million Echo unit shipments. The United States accounted for 58% and 68%, respectively, of each company’s speaker unit shipments. China’s Alibaba and Xiaomi shipped 3 million and 2 million smart speaker units respectively.

Indeed, with Facebook’s previous consumer electronics ventures into virtual reality (Oculus) and mobile phones generating little consumer traction, the Portal is using Amazon’s Alexia voice-generated technology as well as Google Android mobile operating system to gain consumer interest.

 

Best Buy Reports Softer Q2 Entertainment Sales Increase

Best Buy Aug. 28 reported 8.5% same-store entertainment sales increase in second quarter (ended Aug. 4) – down from 15.4% sales increase in the previous-year period.

The entertainment segment, which includes myriad products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software, generated 7% ($604.7 million) of Best Buy’s domestic revenue in the quarter compared to 6% ($1.27 billion) last year.

Internationally, entertainment same-store sales increased 14.3%, generating $44.4 million (6%) of revenue. That compared to 0.5% increase and revenue of $33.4 million (5%) last year.

Best Buy’s legacy CE unit saw 6.8% increase in domestic same-store sales, up from 2.5% increase last year. Revenue remained relatively flat at $2.76 billion compared to $2.64 billion last year.

“Our comparable sales growth was helped by the favorable environment in which we operate and driven by how customers are responding to the unique and elevated experience we are building,” CEO Hubert Joly said in a statement. “We are particularly encouraged with the continued progress of our … continued market share gains. We are excited about the progress we are making on the implementation of our Best Buy 2020 strategy and the opportunities in front of us.”

 

 

DVD/Blu-ray Disc Player Ownership Continues to Decline

DVD/Blu-ray Disc player use remains in decline, with household penetration dropping to 67% in the first quarter of 2018 from 73% at the end of 2017, according to new data from Nielsen.

The drop underscores ongoing changes in consumer home entertainment behavior as fewer people watch, purchase and rent packaged media. Indeed, DVD players could be found in nearly 90% of U.S. households in 2008, despite the fact overall unit sales of DVD players actually declined 25% in the first half of that year, according to The NPD Group.

Among the coveted 18-34-year-old demo in 2018, DVD/Blu-ray player ownership has shrunk to 57.8%, compared to 69% among 30-49-year-olds and 58.6% among 50-64-year-olds, according to Statista.com.

Nielsen contends the average time an adult spent per day using a DVD/Blu-ray player was six minutes in Q1. That compared to 14 minutes with a video game console and 26 minutes with an Internet-connected device.

By comparison, live-TV viewing topped four hours daily, followed by the smart phone (2 hours, 22 minutes) and radio (1:46 hours).

Nine out of 10 U.S. adults use linear platforms in the average week. Live + time-shifted TV viewing reached 88% of persons in the first quarter of 2018, while radio had the largest reach across platforms at 92%.

A silver lining in the trends is that most Blu-ray players are connected to the Internet, thereby enabling access to over-the-top video and subscription streaming services such as Netflix, Amazon Prime Video and Hulu.

Indeed, Nielsen found that many households have access to more than one of the aforementioned SVOD services. Across the total U.S., 27% of TV households have access to only one service and 37% to more than one service. Eleven percent have access to all three.

Meanwhile, Nielsen reported that DVR penetration, which only a few years ago was rapidly expanding in U.S. homes, has seen its growth slow but is still present in 55% of TV households. Newer media, such as Internet connected devices and smart TVs, that enable streaming of content to the TV set, are showing strong year-over-year increases. Both device types are now in 37% and 38% of TV households, respectively.