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Retailers Report Soft December CE Sales

1/17/2011 12:01:00 AM Eastern

NEW YORK — Best Buy, hhgregg and Sears,
as well as major discounters, all reported soft
December CE sales.

Best Buy said soft TV demand and a sharp
dip in entertainment software sell-through took
its net sales down 1.6 percent in December to
$8.4 billion.

In the U.S., revenue declined 3.2 percent to
$6.5 billion and comp-store sales fell 5 percent.
Domestic sales were hurt by a low double-digit
decline in TVs, which dragged CE category
comps down 7.9 percent, and by a 15.4 percent
drop in music, movies and gaming titles
year over year.

The declines were partially offset by brisk demand
for e-readers, a 10.9 percent increase in
major appliance comps, and a 7.6 percent gain
from the chain’s services sector year over year,
Best Buy said.

Other categories showing strength last
month included mobile phones, where sales
of smartphones led a low-double-digit compsales
increase, and mobile computing, where
a mid-single-digit comp-sales increase was
driven by tablet computers.

BestBuy.com also posted solid gains, as online
sales rose 13 percent year over year.

hhgregg reported lower comp-store sales
for its fiscal third quarter, ended Dec. 31, 2010.

For the fiscal third quarter 2011, the chain estimated net
sales to be $653.7 million, an increase of approximately
30.6 percent as compared with the $500.4 million of net
sales reported in the fiscal third quarter last year.

But comp-store sales for the quarter are estimated to
decrease 6.2 percent, with the video category expected
to decrease 5.9 percent, the appliance category expected
to decrease 5.7 percent, and the other category expected
to decrease 7.9 percent.

Dennis May, president and CEO, commented, “While we
are pleased with our overall sales and market share gains
in the video category, our mix of video product was different
than our expectations going into the holiday selling
season. Industry sales from newer technologies like LED
and 3D TV increased less than expected, and our mix of
entry-point televisions was higher than anticipated, which
negatively impacted our merchandise gross margin.”

Weakness in Sears’ CE and major appliances businesses
dragged same-store sales down 5.3 percent in
November and December. More than half the decline was
attributable to CE, Sears said, although majaps also contributed
to the downturn.

The decline was steepest in December, when samestore
sales fell 6 percent, giving Sears a 3.8 percent yearto-
date decline in comp sales through Jan. 1.

In contrast, sister discounter Kmart posted positive
comps across the board, with same-store sales up 3.4
percent in November and December, 2.3 percent in December,
and nearly 1 percent year to date through Jan. 1.

Kmart attributed the holiday-period gains to the popularity
of its layaway program and strength in its non-CE
hardlines categories.

Among the discounters, Target said net sales rose 1.4
percent to $9.9 billion while comp-store sales edged up
0.9 percent due to “softness” in CE and other categories.

At Costco, CE comp sales fell by the high single digits
due to TV price declines and a modest mid-single-digit
gain in unit volume, plus weakness in cameras and portable
navigation devices. Net December sales rose 11 percent
to $9.2 billion, and U.S. comp sales rose 3 percent
excluding gasoline, Costco said.

Fellow warehouse club BJ’s said net sales rose 7.3 percent
to $1.3 billion and comp sales increased 1.4 percent
excluding gasoline. Top performers included computers
and video games, while packaged video was among the
weakest. — Reported by Alan Wolf and Steve Smith

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