Retail got off to a less than stellar start this holiday season, as high fuel prices and low consumer confidence muted the impact of Black Friday sales on November revenue.
Best Buy said comparable store sales moderated in November following stronger performance earlier in its fiscal third quarter, which ended Nov. 27, the Saturday following Thanksgiving Day. But buoyed by holiday sales activity, “We finished the quarter with a solid final week,” said chief financial officer Darren Jackson.
For the three months, Best Buy's United States-based businesses saw sales rise 9 percent to $5.9 billion, boosted by new store openings, while same-store sales grew 3 percent, far short of last year's more than 8 percent spike and below analysts' forecasts. By contrast, the company's 22-unit Magnolia Audio Video chain enjoyed a 7.2 percent hike in same-store sales, thanks to “strong” customer traffic that was aided by a 50th anniversary promotion.
CEO Brad Anderson attributed the gains to “outstanding” store execution, which helped overcome softness in low-priced, traffic-driving categories like music and movies by driving a higher average ticket. Top performing categories included MP3 players, notebook computers, flat panel DTVs, digital cameras and major appliances. The latter saw low double-digit comp store sales gains due to expanded laundry and refrigeration assortments and delivery services.
No. 2 CE specialty chain Circuit City will release its quarterly sales results today.
November proved kinder to Sears. Record Black Friday sales and strong showings by CE and majaps edged total revenue up 1.9 percent to $2.5 billion last month and drove comp sales 2.8 percent higher year-over-year.
“We were pleased with our November sales results, especially our strong start to the holiday shopping season,” said CEO Alan Lacy. “Despite sluggishness early in the month, we enjoyed particularly strong customer response to our enhanced promotional events and had… very solid performances in key gift categories such as home electronics… and our home appliance business had another strong month.” Both categories were up by the high single-digits, the company said.
The story was different at Wal-Mart, which sharply reduced its November comp store forecast over Thanksgiving weekend from a high of 4 percent to 0.7 percent due to disappointing Black Friday sales. (See p. 1.) Total sales at its flagship discount stores grew 6.6 percent to $15.7 billion last month, while comps edged up a mere 0.3 percent. The company said average ticket and traffic were essentially flat in November and projected a modest 1 percent to 3 percent comp gain for this month.
Meanwhile at Target, total November sales grew 9 percent to $4.2 billion and comps increased 3.2 percent, in line with its earlier estimates. The company said it ended the month with its inventories in “excellent condition,” and forecast comp gains of 3 percent to 5 percent this month.
Among the wholesale clubs in November, net sales at Costco increased 7 percent to $4.1 billion and comps grew 5 percent; net sales at Wal-Mart's Sam's Club increased 5.3 percent to $3.0 billion and comps grew 2.9 percent; and net sales at BJ's increased 5.5 percent to $591 million while comps grew 1.8 percent. Top performers at Costco included computers, A/V and white goods, while BJ's reported weakness in white goods, film, batteries and movies.