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.
It's a tough week to be a retailer in search of customers. First, the shares of J.C. Penney (JCP) cratered after the Ron Johnson-led retailer reported abysmal fourth-quarter numbers Wednesday night.
Next up: Sears (SHLD). The iconic retailer can't turn a profit or get customers excited about its merchandise or Kmart's. After reporting yet another quarter of steep losses early Thursday, Sears' stock dropped nearly 5%.
Releasing results so close to JCPenney at least makes MOREMaureen Farrell - Feb 28, 2013 3:15 PM ET
Sears (SHLD) is amazingly still one of the hottest stocks of 2012. Shares are up nearly 55% year-to-date. But the retailer's stock plunged more than 20% Friday after the Kmart owner reported another massive loss and a decline in sales.
The company has been in turnaround mode for years. But it has two things in its favor that has kept the company from becoming as much of a mess as fellow MOREPaul R. La Monica - Nov 16, 2012 3:15 PM ET
Sears Holding Company has had its membership in the S&P 500 revoked.
The ailing retailer, which owns Sears and K-Mart chains as well as apparel brand Land's End, will exit the index at the close of trading on Tuesday, Sept. 4, said S&P late Wednesday.
S&P said the number of Sears shares available to the public, known as its public float, has long been below the 50% threshold needed to be considered MOREBen Rooney - Aug 30, 2012 10:55 AM ET
Investors are discerning shoppers when it comes to retail stocks.
The clear winners appear to be big-box stores such as Wal-Mart and Target, while specialty outlets such as office supply chain Staples are bringing up the rear.
Shares of Target (TGT) rose to a new 52-week high Wednesday after it reported better-than-expected quarterly earnings and raised its forecast for full-year profits. The stock has gained 26% so far this year, outperforming Wal-Mart's MOREBen Rooney - Aug 15, 2012 2:13 PM ET
Not a member yet?Sign up now for a free account
|$33-an-hour babysitters teach art, clean up|
|Dov Charney is still at American Apparel. Do the numbers show it?|
|Twitter removes images of James Foley's death|
|Hedge funds love health care, hate media stocks|
|Branson, business leaders seek Ukraine solution|