CE Chains Post Surprising Dec. Sales Increases

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While December sales were flat for full-line retailers, CE merchants managed to squeeze out single-digit comps during an otherwise sluggish holiday season.

Setting the pace was No. 1 electronics chain Best Buy, which enjoyed a 3.7 percent hike in same-store sales for the five-week period ended Dec. 30 and a 19 percent gain in total sales to $2.69 billion.

Although revenue fell short of the nearly 10 percent comp-store hike it enjoyed in December 1999, the company was pleased with its results, "particularly in light of the generally softer consumer spending and challenging weather conditions," said chief financial officer Allen Lenzmeier.

Inventory levels were on plan, the retailer reported.

While No. 2 CE chain Circuit City saw its same-store sales decline 1 percent in December, comp revenue rose 7 percent on an apples-to-apples basis when major appliances-which it dropped last year-are factored out of the prior-year figures. Total sales rose 2 percent to $1.66 billion.

According to president/CEO Alan McCollough, digital devices and appliance-replacement products, including software, PC peripherals and video game hardware, led the charge, though store closings caused by severe winter weather impacted sales.

McCollough added that Circuit City would cut back the size and scope of its store-remodeling program (see p. 1), although the 15 to 20 new units planned for 2001 would adhere to the original redesign first introduced in Florida last year.

Meanwhile, RadioShack reported an 8 percent hike in same-store sales at company-owned units and an 11 percent gain in total revenue (including dealer/franchise stores) to $705 million. Chairman/CEO Len Roberts attributed the chain's record year to its "unique products, services and strategies" and the "continuing excitement surrounding the digital product cycle."

Same-store sales were more sluggish at Tweeter Home Entertainment Group. President Jeff Stone blamed the chain's slim 1.3 percent fourth-quarter gain on flagging consumer confidence and the company's decision to refrain from promotional pricing. Total sales rose 31.2 percent for the quarter, to $162 million, on the strength of recent acquisitions, including Chicago's United Audio and Douglas TV, which together enjoyed a 10.4-percent hike in comp-store sales for the period.

By contrast, Ultimate Electronics saw its same-store sales soar 12 percent for the two months ended Dec. 31, while total sales grew 31 percent to $127.5 million for the period.

President Dave Workman said digital products were the hardest chargers, led by HDTV, camcorders, cameras and DVD players. Despite the soft and promotional sales environment, gross margin will exceed the prior-year period, and year-end inventory levels were "appropriate," the company said.

High-end CE specialist Good Guys also had a good season. Both net and comp-store sales grew 8.5 percent for the quarter to $282.2 million, driven by strong demand for digital such products as HDTVs and portable audio, as well as "sizeable growth" in wireless, mobile and core A/V products.

Santa was less forgiving to full-line merchants, whose comp-store sales generally stalled. Among the nation's largest retailers, Wal-Mart's were up 0.3 percent, Kmart's rose 0.7 percent, Target's increased 0.1 percent, and Sears' fell 1.1 percent despite "solid gains" in appliances, said chairman/CEO Alan Lacy.

To improve profitability, Sears said it will close 53 tire and battery stores, 30 hardware stores and four full-line stores, and will lay off 2,400 employees.

Holiday sales at Electronics Boutique inched up 1.7 percent to $266.1 million for the nine-week period ended Dec. 30. This compares with $261.7 million during the same period last year. Comp-store sales for the same nine weeks declined 6.6 percent.

Electronics Boutique said comp-store sales were positively impacted by an increase in video game hardware sales of 51.8 percent, which were driven by sales of PlayStation2. However, offsetting this increase were declines in sales of Pokemon products and original PlayStation software.

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