It seems all consumer electronics retailers aren't the same after all. Two weeks after we saw Circuit City (NYSE:CC) follow the lead of Best Buy (NYSE:BBY) in blowing past Wall Street targets, we find Tweeter (NASDAQ:TWTR) tripped up at the starting line.
Despite the favorable tailwind of flat-screen televisions and portable media players that helped propel its larger rivals, Tweeter produced an embarrassing 13% slide in its September-quarter comps. That's not home entertainment. That's broken-home entertainment. Disgusted traders sent the shares down this morning by as much as 27% off yesterday's close.
A good chunk of that top-line decline came from weakness in the company's projection television business. It was partly offset by strength in LCD and plasma flat-screen sets, but we're not just talking about shuffling up the product mix for a quick fix here. Folks just aren't shopping at Tweeter. They're going to Best Buy, Circuit City, or even Wal-Mart (NYSE:WMT) to get deals on next-generation gadgetry and home-theater appliances.
Tweeter knows this. Fiscal 2006 will be another year in the red for the company. It continues to post annual operating losses. It has been in retreat mode -- going from 176 stores to just 153 over the past two years -- and there is little reason to get excited here. The company has posted healthy comps growth through the December and March quarters, but now it's back in an unloved rut.
Don't let the dirt cheap share price fool you here. Until Tweeter starts showing signs of profitability, keep your money invested in proven players like Circuit City and Best Buy if you want to ride the likely strong holiday showing in consumer electronics.
For more prose on peddlers of plasma products:
- Circuit City Hits the Racing Circuit
- Best Buy's Plastic Surgery
- Foolish Face-Off: Battle of the Electronic Retailers
Best Buy is a Motley Fool Stock Advisor recommendation. Want to learn why? Check out the subscription-based research service with a free 30-day trial membership. Wal-Mart is an Inside Value selection.
Longtime Fool contributor Rick Munarriz can watch time fly at a consumer electronics store. He's a gadget geek that way. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. T he Fool has a disclosure policy.
