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Retailers Report Strong Year-End Sales Volume

1/16/2006 02:00:00 AM Eastern

December and calendar fourth-quarter sales were strong for reporting specialty retailers, exceeding or approaching record levels.

Sales at Best Buy in December were up 12 percent to $5.7 billion, with comparable-store volume up 5.8 percent. Stores in the United States had an 11 percent increase in sales, to $5 billion, while comparable stores had a 5.6 percent gain. Sales in Canada, including Future Shop, Best Buy and Geek Squad outlets, had sales of $700 million, up 20 percent, but 20 percent of that rise reflected exchange-rate gains. Sales at comparable Canadian stores were up 6.6 percent.

The retailing giant also said its U.S. Magnolia Audio Video 20-store chain had a December sales increase of 23 percent, bolstered by a 30.7 percent improvement in same store sales. Additionally, Best Buy said its Internet sales were up 40 percent for the month, and sales of gift cards increased about 20 percent.

On a product category basis, Best Buy said consumer electronics generated 47 percent of December volume, against 44 percent in the same 2004 period, and had a 7.5 increase in comp stores sales. Home office products represented 26 percent of volume, off from the year-earlier 27 percent, and same-store sales were off 0.1 percent. Also down were entertainment software sales for the month, which were 23 percent, off 3 percent, and same-store sales dropped 3 percent. Appliances took a 4 percent share of December sales, up from 3 percent, and had an 8.4 percent increase at comparable stores.

Brian Dunn, North America retail president, said the gain in consumer electronics volume was paced by triple-digit same-store sales growth in flat-panel TVs and double-digit improvement in MP3 players, while sales in CRT TVs and DVD players declined. Home office results included low double-digit sales improvement for notebook PCs and a strong gain for cellular phones. In the software category, decline in demand for DVDs and CDs offset the improvement in same-store sales of video games.

For the fiscal third quarter, Best Buy had an 11 percent overall revenue gain and a 4.1 percent rise in same-store sales. The latter was paced by 12.4 percent improvement in the United States while Canadian sales were up 2.3 percent.

Finance executive VP Darren Jackson said the chain expects to open seven new stores in the current quarter, but is holding back on store conversions while it redevelops deployment strategies. He said he expects earnings to be up 11 percent for the quarter and 22 percent for the fiscal year.

Circuit City said December sales rose 12.1 percent to $1.98 billion with comparable sales posting a 10.8 percent rise. Domestic sales were up 12.1 percent to $1.88 billion as same-store sales had an 11.1 percent rise. International sales rose 12.6 percent to $110 million, with a 4.2 percent gain for comparable stores. Web sales were up 49 percent.

Chairman/CEO Alan McCollough said “a strong increase in the average ticket size more than offset a reduction in traffic.” Driven by a triple-digit same-store gain for flat panel models, he said, TV sales were up in double digits, while DVD sales declined. Sales of information technology products were up modestly though notebook sales had a double-digit gain. Digital audio products had a double-digit sales increase, as did mobile navigation and digital radio products. But sales of analog home audio product had a double-digit sales decline. Same-store sales in entertainment software declined as a drop in demand for music and video software offset the rise in sales of video game hardware.

Circuit City now expects sales for fiscal 2006 to be up in the 10 percent to 12 percent range, an improvement on its earlier outlook for an 8 percent to 10 percent rise. It reaffirmed its estimate of an operating margin for the year of 1.6 percent to 2 percent.

Tweeter Home Entertainment Group said sales for the quarter from continuing operations of $267 million were up 4 percent, while volume at comparable stores rose 6 percent to $251 million. CEO Joe McGuire said the results “illustrate the success of changes we have made in our marketing campaign as well as in our operations.”

McGuire said digital TVs were “a significant traffic driver in our stores,” and for the quarter, flat-panel models produced a 47 percent revenue improvement on a 64 percent increase in unit sales. Also, he noted “in-home installation labor revenue grew 37 percent over last year and made up 5.4 percent of our total revenue.”

Rex Stores reported merchandise sales for the fiscal 2005 fourth quarter rose approximately 3.5 percent to $99 million from the year-earlier period. Comp-store sales rose approximately 7.5 percent. Chairman Stuart Rose stated merchandise and comp-store sales gains in the period “were characterized by increased promotional activities, lower gross margins and strong sales in the Gulf Coast region as consumers replaced items damaged in Hurricane Katrina. The sales levels “also highlight the effectiveness of our sales associates in providing customers with direction on their selections this holiday season.”

Sharper Image said total December sales of $150.2 million and store sales of $106.1 million were each down 9 percent. Same-store sales were off 15 percent. Total catalog sales and direct-marketing sales, including wholesale, were $16.9 million, off 26 percent, and Internet sales declined 10 percent to $27.2 million. Through its fiscal 11-month period total company sales were down 12 percent to $609.4 million, and store sales declined 6 percent to $383.4 million, with comp-store volume down 16 percent. Total catalog sales and direct-marketing sales of $127.9 million were off 28 percent. Internet sales of $98.1 million decreased by 8 percent.

Wal-Mart posted total December sales of $40.8 billion, up 6.3 percent, with Wal-Mart stores showing a 6.7 percent rise to $27.9 billion, Sam's Club having a 4.8 percent increase to $4.6 billion and international sales rising 5.7 percent to $8.3 billion.

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