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Retailers deemed 'nonessential' are in big trouble

Ben Muessig, Los Angeles Times on

Published in Business News

Some of these businesses, including Target as well as Walmart, also stock a wide range of other goods, and sales at their departments selling more discretionary items from electronics to homewares have also risen.

The latest retailer to report a sales jump was BJ's Wholesale Club, which has more than 200 membership outlets in the eastern U.S. Lee Delaney, chief executive, said BJ's had become a "one-stop destination," helping total revenues leap 21% in the quarter to $3.8 billion. Operating income more than doubled to $144 million.

Declarations by U.S. states and cities over which businesses must close have been contested, and several industry lobby groups fought hard to be given the valuable "essential" designation.

The National Retail Federation called on the White House to intervene, and called for "big box" outlets, among others, to be kept open.

The crisis has accelerated trends that were developing long before the outbreak and is threatening to widen the gulf between winners and losers in retail.

While department store chains and other companies with out-of-favor formats had been floundering long before the outbreak, chains such as Walmart have coped with the rise of e-commerce far better thanks to a mix of convenience and low prices in stores, as well as investments in online operations.

"The divide has really grown," said Perkins. "It will be interesting to see whether the divide closes as the economy reopens, but it's unlikely that it's going to narrow drastically."

Executives at companies that have outperformed during the pandemic said their successes were in large part due to their own initiative to attract and retain customers, which had often required them to reimagine how they operate.

 

Best Buy, the electronics chain, closed to in-store customers even in jurisdictions where it was not required to do so but remained opened for curbside collection.

Corie Barry, chief executive, said the company "believed it was the best way at the time to keep our customers and employees as safe as possible."

First-quarter sales dipped 6% from a year ago to $8.6 billion while net income fell from $265 million to $159 million, yet the declines were less than some analysts expected.

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