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Strong TV Sales Boost Jan. Retail Revenue

New York — Strong TV sales helped retailers regain their footing in January, as a temporary glut of flat-panel inventory led to opportunistic buys and compelling Super Bowl sales events.

Within the specialty channel, Conn’s, the 76-store CE and appliance chain, said comp-store sales rose 21.7 percent in January and 12.5 percent for its fiscal fourth quarter, ended Jan. 31. Net sales rose 22.3 percent to $245.4 million for the three-month period, driven by the addition of two new stores during the quarter and replacement sales following Hurricane Ike last fall.

Conn’s also attributed the comp-sales gains to its “focus on increasing its market share,” which it said it accomplished without sacrificing gross product margins.

Broken out by category, CE revenue grew 43.8 percent to $110 million during the quarter, led by LCD TVs and higher sales of home theaters. Majap sales edged up 2.1 percent to $52.3 million in an otherwise brutal white-goods market, as Conn’s “focused on improving its performance in this category” and benefited from replacement sales in the wake of Hurricane Ike.

The chain also enjoyed higher sales of laptop computers, DVD players, video game equipment and accessories, which were partially offset by lower MP3 player revenue.  Sales gains in extended-service plans were “consistent with the overall increase in product sales, the company said.

Net sales for the full year, ended Jan. 31, rose 10.1 percent to $805 million, reflecting the addition of 12 stores since Nov. 1, 2007, and comp sales increased 2 percent. Earnings will be announced March 26.

Among national discount chains, Wal-Mart said sales at its flagship domestic discount stores grew 6.1 percent to nearly $18 billion in January and comp-store sales rose 2.1 percent. Newly promoted vice chairman Eduardo Castro-Wright attributed the gains to increased traffic, innovative merchandising and an emphasis on customer service. The company said the stores “met or exceeded expectations” in the entertainment and hardlines categories and continued to outperform the market.

At Target, January sales rose just less than 1 percent to $4.1 billion and comp sales slipped 3.3 percent. The company said the declines were in line with expectations and stemmed from fewer transactions. Comp sales increased by the high single digits in CE and declined by the low double digits in the entertainment category.

Within the warehouse club channel, Costco said January sales were flat at $5.1 billion while comp sales at United States stores rose 4 percent excluding the impact of lower gas prices. Traffic was up 4 percent in January vs. 2.5 percent to 3 percent over the September through November period, and CE and majap sales were flat for the month.

In a conference call held yesterday to announce substantially lower earnings projections for the second fiscal quarter, chief financial officer Richard Galanti noted that TV sales were up 80 percent in units but only 18 percent in dollars last month due to price declines and opportunistic buys offered by vendors.

By way of example, Galanti pointed to the two-pack flat-panel bundles that were sold on for $1,200 to $1,600. The individual TVs are “$200 to $300 cheaper than what we were buying them for eight or 10 weeks ago, and that’s what’s driving that business,” he said.

Similarly, TV sales in November rose 50 percent in units, to 250,000 sets, but only 5 percent in dollars, as Costco passed most of its savings along to customers. But the aggressive pricing, along with slower overall sales and increased employee medical costs, impacted earnings and led to the lowered forecast.

Galanti said TV unit sales remained in the 200,000 range in January, “which is a little stronger than I would have expected,” having underestimated the lure of Super Bowl compared to Christmas-period demand.

At Wal-Mart’s Sam’s Club unit, January sales slipped nearly 1 percent to $3.1 billion and comp sales increased 2.4 percent, excluding the impact of gas prices. Doug McMillion, who ran the division before heading Wal-Mart International, effective Feb. 1, said club members were cautious with discretionary spending, with food and consumables largely driving sales.

At BJ’s, net sales rose nearly 1 percent in January to $656.7 million, and comp sales increased 7.6 percent, excluding the impact of gas prices. The company included computers among its strongest-performing categories and TVs and prerecorded video among its weakest.

Separately, hgregg said same-store sales fell 13.2 for the three months, ended Dec. 31. The drop-off was due largely to a 22 percent decline in comp-store sales of major appliances, particularly at entry-level and lower midprice points, although comps for premium three-door refrigerators and high-efficiency front-load washers also slipped during the third quarter. Video comps slid 7 percent as prices for flat-panel TVs fell slightly faster than double-digit comp store sales unit increases, the company said. Net sales increased 6.6 percent to $416.1 million for the period, thanks largely to the net addition of 23 stores over the preceding 12 months, raising the chain’s store count to 108 locations.

Barclays Capital retail analyst Michael Lasser said the strong TV sales reported by some retailers reflected aggressive pricing from vendors faced with excess capacity from Circuit City’s demise. “It is increasingly clear that retailers have recently benefited from the absence of Circuit City as vendors have been aggressively pushing product to the remaining retail outlets,” he observed in a research note. “While these opportunities may not persist as the supply chain imbalance is corrected, we believe it shows that the surviving consumer electronics retailers will become increasingly critical to the vendors as we emerge from this downturn.”