Purchases of appliances and consumer electronics helped goose otherwise sluggish comp store sales for mass merchants last month, as higher interest rates and gas prices curtailed consumer spending. But the impact of the Fed's recent actions 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 credited digital products, personal computers and music and movies for the glad tidings. He added that earnings, to be announced on June 13, are expected to increase by more than 50 percent over the year-prior quarter 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.
Among the general merchandisers, Sears said sales edged up 4.8 percent to $2.3 billion last month, while same-store sales grew 3.5 percent. Retiring chairman and 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.
In mass merchantdom, 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 or $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 appliances led a slew of categories that helped nudge 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 and CEO Floyd Hall has been succeeded by Charles Conaway, formerly president and chief operating officer of the CVS drugstore chain. Hall, who announced his pending retirement last month, returned the discounter to profitability during his five-year tenure, although it continues to lose ground to rivals Wal-Mart and Target. Conaway, who helped restructure CVS during its transition from Melville Corp., has a five-year contract with Kmart.
Target Corp. reported that its eponymous 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 and chief financial officer Keith Benson said "healthy gains" in sales of electronics and DVD software contributed to the sales increases.