Best Buy's rehabilitation efforts have run into a formidable challenge: A shortage of sexy new products to breathe life into sagging sales.
Retailers are having enough trouble luring customers into their cavernous stores, especially customers who want to buy and not just play with toys they can purchase online for cheaper.
But Best Buy (BBY) blamed its latest sales drop on an overall "lack of innovation" hitting the consumer electronics industry. As much as this may sound like the old "blame it on the weather" excuse, observers say the absence of big-time gadgets to create buzz is a legitimate headwind.
"It is very believable. There really hasn't been that 'wow' product within the consumer electronics industry within the last six or eight months," said Brian Sozzi, CEO of Belus Capital Advisors.
The marquee product -- sophisticated TVs -- remain too pricey for most consumers, and phones and computers just haven't had a slam dunk winner lately.
Without a major iPhone debut to drive sales, Best Buy said it experienced "ongoing softness" in the mobile phone categories as "consumers eagerly await highly-anticipated product launches."
The company warned it expects comparable sales to contract modestly in the second and third quarters "absent any major product launches."
To further drive this message to Silicon Valley home, Best Buy mentioned the word "innovation" 10 times during its conference call with analysts.
"We need some new excitement in those categories," Best Buy CEO Hubert Joly told analysts during the call.
Of course, Best Buy isn't alone.
Sears Holdings (SHLD) said its domestic same-store sales would have climbed 0.8% last quarter instead of 0.2% if it excluded the "poor performance" of its consumer electronics business.
During its call with analysts, Sears CEO Edward Lampert said the consumer electronics business was the biggest negative driver to sales at both Sears and Kmart.
However, David Magee, a SunTrust analyst who covers Best Buy, notes these are low-margin devices and many of the more profitable games have not hit the shelves yet.
"The real money is made down the road with the software titles," said Magee.
The next-generation of high-definition TVs developed by Sony, Samsung and Toshiba offer compelling technology, but at sky-high prices.
"The consumer doesn't see the value in trading up," said Sozzi, noting many Americans have bought expensive new TVs in the past few years.
Both Best Buy and Sears signaled a desire to combat the innovation drought by focusing on appliance, auto and wearable fitness products related to the "connected home."
While it seems smart to shift attention to these next-generation devices, it's going to take considerable time before these products are real growth drivers and can make up for fewer sales of $1,500 TVs.
You're doing better Sony (SNE), but not good enough... yet.
That's the latest message from Dan Loeb, the firebrand hedge fund manager known for vociferously agitating for changes at some of the world's largest tech firms.
In a sign of "increased confidence," Loeb's Third Point hedge fund increased its stake in Sony to 70 million shares, or roughly 7%, from 6% in May.
Related: Hedge fund targets Sony for spin-off
At least part of MOREMaureen Farrell - Jun 18, 2013 2:36 PM ET
Troubled electronics retailer Best Buy said Thursday that it has teamed up with Samsung to create boutique shops in more than 1,400 U.S. stores.
Best Buy founder Richard Schulze, who owns 20% of the retailer's shares, had been trying to buy the company for months. But a March 1 deadline came and went without a final offer.
Best Buy CEO Hubert Joly has been cutting staff and closing stores to try to MORECatherine Tymkiw - Apr 4, 2013 1:08 PM ET
Investors have plenty of questions about the future of RadioShack following a dismal earnings report, but the electronics retail is still claiming to have the answers.
As it delivered a surprise $21 million loss for the second quarter, RadioShack (RSH) said it would also suspend its dividend program to help bolster its balance sheet. A balance sheet that's saddled with $679 million of debt, including an upcoming debt maturity of $375 MOREHibah Yousuf - Jul 25, 2012 12:25 PM ET
Not a member yet?Sign up now for a free account
|Why Black Friday deals aren't really deals|
|Drone pilot wanted: Starting salary $100,000|
|Uber removes racy blog posts on prostitution, one-night stands|
|OPEC not ready to reverse oil price slide|
|iPads won't be stuffing stockings this year|