Purchases of appliances and consumer electronics helped goose otherwise sluggish comp-store sales for mass merchants last month, as higher interest rates and gasoline prices curtailed consumer spending. But the impact of the Federal Reserve's rate hikes was negligible on Best Buy, which ended its first quarter with a bang.
Best Buy, which reports sales quarterly, said revenues for the four months ended May 27 grew 24 percent to $2.96 billion, while comparable-store sales were up 9.5 percent for the period. Chief financial officer Allen Lenzmeier said the results exceeded the chain's expectations, and he credited digital products, personal computers and music and movies for the glad tidings.
He added that earnings, to be announced tomorrow, are expected to increase by more than 50 percent over the year-prior quarter. That is thanks to higher sales, improved gross profit margins and lower expenses, and that the long-awaited relaunch of BestBuy.com is still several weeks away (see E-Commerce Site Of The Week, p. 16).
RadioShack reported that retail sales increased 11 percent in May to $325.6 million, and comp-store sales at company-owned units grew 7 percent. Total year-to-date sales were up 14 percent to $1.66 billion, and same-store sales rose 10 percent during the period.
Chairman, president and CEO Len Roberts said that comp-store sales were on schedule "driven by strong results in our computer business and audio video categories during the month." He expects "exceptional results" from the launch of the RCA Digital Entertainment Center at RadioShack (see story on p. 3). He also announced that in the fall RadioShack will launch the Microsoft Internet Center @ RadioShack.
Harvey Electronics said sales soared 91 percent to $2.33 million in May and were up 64 percent to $20.76 million for the seven months ended May 27. Same-store sales rocketed 75 percent in May and 51 percent over the comparable seven-month period last year. President Franklin Karp said business continues to benefit from "strong consumer demand for new digital technologies and the custom installation of these new products," the success of three recently opened stores, and from increased marketing efforts.
Among the mass merchants, Sears said sales edged up 4.8 percent to $2.30 billion last month, while same-store sales grew 3.5 percent. Retiring chairman/CEO Arthur Martinez credited appliances and consumer electronics above all other product categories for the gains. He added that the company's e-commerce site, sears.com, will add CE to its assortment this summer.
Wal-Mart said May sales spiked 23.2 percent to $14.57 billion at its Wal-Mart and Sam's Club stores, with the discount stores kicking in $12.52 billion and the warehouse club unit contributing $2.05 billion. Comp-store revenue rose 7.3 percent at the discount stores and 7.8 percent at Sam's Club. Total year-to-date sales through May 26 were up 23.5 percent $58.58 billion, and comp-store sales were up 6.8 percent for the period.
By comparison, BJ's Wholesale Club said sales grew 18 percent in May to $364 million, and were ahead 18.7 percent year-to-date. Comparable-store volume was up 5.5 percent last month and 6.5 percent year-to-date. CEO Jack Nugent said strong demand for computers, among other categories, contributed to last month's gains.
Kmart said small appliances led a slew of categories that helped edge last month's net up 2.7 percent to $2.85 billion, although same-store sales were virtually flat, with a gain of 0.9 percent. Sales for the 17 weeks ended May 24 were up 1.8 percent to $11.04 billion, while comparable-store sales showed a marginal 0.2 percent gain.
In other Kmart news, chairman/CEO Floyd Hall has been succeeded by Charles Conaway, formerly president and chief operating officer of the CVS drugstore chain. Target Corp. reported that its discount unit saw sales rise 9.3 percent to $1.99 billion last month while comp-store sales were ahead 2.6 percent. Year-to-date, the chain enjoyed a 10.9 percent hike in sales to $8.04 billion and a 4.2 percent boost in volume at comparable stores.
Musicland Stores said sales grew 5.8 percent to $118.1 million last month, while same-store volume rose 4.7 percent. Vice chairman/chief financial officer Keith Benson said "healthy gains" in sales of electronics and DVD software contributed to the sales increases.
And for Heilig Meyers, May comp-store sales dropped 1.1 percent, compared to the same month in 1999. Comp-store sales for the three months ended May 31 were unchanged. Heilig-Meyers, the furniture, major appliances and consumer electronics chain, said sales in May were about $141.4 million, 1.1 percent ahead of the $139.9 million written in the same month in 1999. For the three months ended May 31, the retailer reported sales of $421.2 million, 0.9 percent ahead of sales written for the comparable period last year.