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Summer Sales Slumped At CE Chains

New York – The soft economy and sluggish PC demand continued to take a toll on CE chains, which reported weak sales in August and the second quarter.

The major exception was Best Buy, which posted an 18 percent increase in sales to $3.75 billion for the second quarter ended Sept. 1 due to the addition of 66 stores from the year-ago period and ‘an expanding digital product cycle.’ But minus the new locations, the gains in DVD hardware and software, wireless communications and digital TVs, cameras and camcorders only managed to lift same-store sales by 2.8 percent.

Meanwhile, net sales at Best Buy’s Musicland subsidiary fell 1 percent to $400 million while comp sales slipped 0.4 percent on weakness in the pre-recorded music category. Comp sales at Best Buy’s Magnolia Hi-Fi unit ‘declined modestly,’ the parent reported due to reduced customer traffic.

The story was different at No. 2 CE chain Circuit City, which saw its retail revenue drop 19 percent to $2.0 billion for the quarter ended August 31, while its comp store sales sank 21 percent. President/CEO Alan McCollough attributed the steep declines to the absence of the company’s appliance business, which made year-to-year comparisons misleading. Indeed, minus last year’s white goods contribution, which represented 14 percent of second quarter sales, the comp store decline was 9 percent.

Also hampering business was ‘continued industry-wide weakness in PC sales and general softness in other categories,’ McCollough said.

Fifth-ranked CE retailer RadioShack fared somewhat better in August. Total chain-wide sales for the month were flat at $379.8 million while same-store sales at company-owned units fell 2 percent. Despite the declines, chairman/CEO Len Roberts reported ‘solid growth’ within its two ‘anchor’ categories: wireless communications and parts/batteries/accessories.

Sales also faltered at West Coast specialty A/V chain Good Guys. Total revenue for the quarter ended August 31 fell 7 percent to $190.9 million and comp store sales slid 8 percent, attributable, the company said, to the economic downturn and what it described as ‘the industry-wide softening in demand for consumer electronics.’

To help buoy its business, Good Guys has hired Accenture, formerly Andersen Consulting, to improve the effectiveness of its merchandising and advertising, and The Gallup Organization to strengthen its sales team and recruitment efforts.

Among full-line merchants, Sears said August sales edged up 0.5 percent to $2.2 billion while same-store sales increased 0.2 percent. Chairman/CEO Alan Lacy said the flat comp store results represented ‘a modest improvement from recent trends,’ and cited double-digit sales gains in white goods.

By contrast, business was seemingly booming among the discount tier. No. 1 retailer Wal-Mart said August sales were up 15.2 percent to $10.54 billion while same-store revenue climbed 7.2 percent, and Target reported a 13.4 percent increase in revenue to $2.45 billion as same-store sales grew 3.9 percent. Kmart continued to lag its peers, however, with net sales slipping 2.6 percent to $2.6 billion and same-store sales up a modest 0.2 percent due to the impact of inventory liquidation sales. Minus that action, same-store sales grew 2.3 percent in August.

Warehouse clubs also enjoyed robust business in August. Category leader Costco said sales rose 10 percent to $2.74 billion while comp store sales grew 4 percent, and Wal-Mart’s Sam’s Club division saw sales grow 10.6 percent to $2.02 billion while same store sales increased 6.1 percent.

Similarly, BJ’s Wholesale Club said net rose 6.5 percent last month to $384 million and same store sales grew 3.5 percent, attributable to such ‘high growth categories’ as room air conditioners, large screen TVs, DVD players and ‘small electronics.’ Weaker categories included PCs and related software, the company said.