DTV, Computers Fuel Retail Sales

New York— The recent round of second-quarter sales reports by publicly held CE retail chains provided a bird's-eye view of product performance on store floors nationwide.

Not surprisingly, large screen digital televisions, particularly in thin panel LCD and plasma formats, enjoyed accelerating sales velocity, while consumer demand for PCs, notebooks and related software surged in advance of the back-to-school season.

Indeed, Best Buy reported that total second quarter revenue in the home office category increased its share of the company's overall product revenue mix to 39 percent, up from 36 percent in the same period a year ago, due primarily to increased revenue from notebook computers.

Comparable store sales gains in notebooks reached the strong double digits in the second quarter, while comp-store sales of desktop computers reversed recent trends, gaining in the high single digits. The category benefited from the increased use of computers as media servers, the rising popularity of digital photography and technology advances, Best Buy said.

CE's share of the business declined slightly in the second quarter, down to 35 percent from 36 percent during the year-ago period, despite a comp-store sales gain that reflected rising demand for digital, plasma and LCD televisions, and the increasing popularity of digital cameras and camcorders.

Comp-store sales of digital TVs increased in the strong double digits, as Best Buy significantly expanded its assortment in this category during the quarter. Digital products — including digital, plasma and LCD televisions; digital cameras and camcorders; DVD hardware and software; cellular telephones and digital broadcasting systems — comprised 24 percent of revenue in the period, up from 20 percent share in 2002.

Revenue from entertainment software declined in the overall mix to 19 percent from 20 percent in the year-ago period. Comp-store sales of DVDs rose by strong double digits and were supported by sales of popular new releases. These gains were largely offset by a comp-store sales decline of CDs and video games.

The story was somewhat similar at Circuit City, which reported strong sales growth in new TV technologies including digital big-screens, LCD, plasma, digital imaging and DVD software. The company also saw buoyancy in such back-to-school fare as PC hardware and software, gaming software, wireless communications and portable A/V.

Likewise, Good Guys said that unit sales of plasma displays doubled, and LCDs tripled, during the prior three months, while the sales pace of DVD players, projection and CRT TVs, and home audio declined.