Sector Snap: Consumer electronics retailers slide

CHICAGO - Consumer electronics chains sank in Monday trading after analysts said big Black Friday markdowns drew shoppers, but cut into profits, and investors worried whether the spending would continue.

The decreases came amid broader market declines fueled by concern about the impact of a continuing drop in consumer spending on the economy.

Analysts said Monday that consumer electronics gifts remain popular this holiday, but the deep discounts offered during the Thanksgiving weekend — like the Toshiba laptop Best Buy Co. was selling for $379.99, nearly $270 off — will make it harder for companies to turn revenue into profits.

"Note that sales likely came at reduced margins, as vendors and retailers alike worked to ensure rapid sell-through," Goldman Sachs analyst Matthew Fassler told investors in a research note published Monday.

The day after Thanksgiving, dubbed Black Friday because it historically was the day when a surge of shoppers helped stores break into profitability for the full year

The day after Thanksgiving, dubbed Black Friday because it historically was the day when a surge of shoppers helped stores break into profitability for the full year, is one of the busiest shopping days of the year. This year, sales on Black Friday climbed a surprising 3 percent, according to a ShopperTrak RCT Corp.

While discounters, like Wal-Mart Stores Inc. fared better than most, experts said sales were strong across all areas of retail.

KeyBanc Capital Markets analyst Bradley Thomas said he suspects the sector, which also includes stores like RadioShack Corp. and Circuit City Stores Inc., will continue to heavily mark down items for the rest of the holiday shopping season.

"We believe that consumer electronics is especially promotional this year due to the discretionary nature of the products," he told investors.

Shares of Best Buy sank $1.45, or 7 percent, to $19.26 in midday trading Monday.

RadioShack fell 45 cents, or 4.7percen, to $9.39 while Conn's Inc. slid $1.05, or 17.1 percent, to $5.11.

Hhgregg Inc. fell 20 cents, or 3.4 percent, to $5.76.

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