Best Buy Acquiring Pacific Sales
By Alan Wolf -- TWICE, 1/16/2006
Los Angeles — Best Buy is buying Pacific Sales Kitchen and Bath Centers, the nation's 10th largest white-goods dealer.
The $410 million deal is expected to close this month.
According to Brian Dunn, Best Buy's president/COO, effective Feb. 26, the chain plans to use Pacific's premium home improvement format to “capitalize on the rapidly growing high-end segment of the U.S. appliance market.”
The move would mirror H.H. Gregg's launch earlier this year of Fine Lines, a freestanding, premium majap boutique for high-end builders, re-modelers, kitchen designers and their well-heeled customers. It could also represent a white goods version of Best Buy's premium A/V strategy, in which the chain acquired high-end specialist Magnolia Audio Video and is using the franchise within its own stores as Magnolia Home Theater shops.
Pacific Sales, based here, operates 14 kitchen and bath stores in Southern California. The privately held business, which also carries A/V products, plumbing fixtures, hardware and home furnishings, is expected to generate $320 million in sales this year. White-goods revenues were $201 million in 2004, according to TWICE's Top 100 Appliance Retailers report (June 20, 2005), which landed Pacific at the No. 10 spot.
Best Buy said it plans to operate the chain as a wholly owned, indirect subsidiary, and would expand the number of stores.
Banc of America analyst David Strasser, whose company advised Pacific on the acquisition, believes that Best Buy will likely roll out core Pacific stores with a greater retail consumer focus — as opposed to the current focus on interior designers — and will eventually integrate the concept and product selection with Magnolia Home Theater to develop a high-end, full service home store. Best Buy may also integrate some of these products into its own flagship stores, he said.
