Comp-store sales were down in December for Best Buy and most of the nation's leading full-line chains, underscoring the dramatic downturn in consumer confidence and spending over the holiday selling season.
At Best Buy, domestic same-store sales fell 6.8 percent and net sales slipped 1 percent to $5.9 billion for the five weeks ended Jan. 3.
The retailer attributed the comparable store sales decline to a decrease in traffic, which was partially offset by an increase in average ticket. The drop-off neutralized net sales, which included gains from the addition of 138 new stores over the past 12 months.
Total sales at Best Buy rose 4 percent to $7.5 billion for the five weeks, and comps fell 6.5 percent worldwide.
Despite the downturn, the country's No. 1 CE chain believes it continued to gain market share during the holiday shopping season, particularly in mobile phones, computing, home theater and music, due to new store openings and its customer centricity strategy.
"While the environment continues to be as challenging as we expected, consumers are being drawn to brands that they trust, and they are responding to our customer-centric model," said Brad Anderson, vice chairman and CEO.
Jim Muehlbauer, executive VP/chief financial officer, said the revenue results for December were in line with projections and reflected "strong market share gains." He said the company managed its promotions effectively, and that while sales trends improved as the month progressed, consumer spending patterns during the post-holiday period remain unclear.
Best Buy lowered its earnings outlook for the full fiscal year in anticipation of restructuring charges it will take as it streamlines operations to prepare for "a challenging fiscal 2010 environment."
Those actions include a voluntary separation program offered to its 4,000 headquarters employees last month. According to published reports, only about 500 workers, or 12.5 percent of the corporate workforce, have accepted the buyouts, which may prompt Best Buy to resort to layoffs. A determination is expected to be made later this month.
On the product front in December:
- CE comps fell 8.7 percent, reflecting reduced demand for digital cameras and MP3 players and "significant declines" in GPS pricing. The total television category posted a high single-digit comp gain, while flat-panel TVs showed low double-digit comp increases on even stronger unit growth;
- Comp sales of appliances fell 24.5 percent for the month amid the weak majap market;
- Home-office comps grew 6.5 percent, driven by "very strong" double-digit comp-sales gains in mobile phones and accessories, while notebook computers experienced low double-digit comp sales gains;
- Geek Squad services revenue was flat, with comps down 0.5 percent;
- Entertainment-software comps declined 12.2 percent, with music and movies down by the double digits. Video gaming was down by the mid-single digits, primarily due to a shift toward software and reduced sales of large-ticket consoles, as well as comparisons with strong results in the prior year's period.
Best Buy said e-commerce sales grew about 34 percent during the period, and that fiscal year-end inventory levels will likely be flat in dollars due to "aggressive management.
The company will report its fiscal fourth-quarter earnings on March 26.
At Sears Holdings, comp sales for the company's Sears and Kmart units together fell 7.3 percent for the five weeks ending Jan. 3.
Comps at Sears declined 12.8 percent on weakness in hardlines and apparel, while Kmart's comps slipped only 1.1 percent due to the success of its layaway program.
The company is projecting that net income for the quarter, ended Jan. 31, will be between $300 million and $380 million, compared with the $426 million reported last year. Sears expects full fiscal-year net income to be between $163 million and $243 million, compared with last year's $826 million.
The company repaid all borrowings under its revolving credit facility in December as working capital needs declined, and expects to end the fiscal year with about $1.3 billion in cash and cash equivalents and $8.5 billion of domestic inventory, down from $9.1 billion in inventory last year.
Meanwhile, December sales were mixed for top mass retailers, with Wal-Mart seeing a slight increase in comp-store sales for the month.
Eduardo Castro-Wright, vice chairman of Wal-Mart Stores, described electronics sales as "solid" in December.
Wal-Mart reported a U.S. sales gain of 4.3 percent to $30.9 billion during December, with comp-store sales up 1.9 percent. Its Sam's Club operation had 2.1 percent lower sales during the month vs. last year, to $4.8 billion.
U.S. comp sales for Wal-Mart for the month rose 1.9 percent, with Sam's Club slipping 0.1 percent. Combined U.S. sales for both operations were up 1.7 percent during the month.
Still, Tom Schoewe, executive VP and chief financial officer, warned that comp-store sales for January should be between flat and 2 percent, and lowered guidance on its fourth-quarter earnings, to be reported on Feb. 17.
Costco did not cite CE sales performance in its December review but reported that overall sales were down to $7.4 billion from the previous year's $7.55 billion.
U.S. comp-store sales were down 2 percent compared with last year's December and international comp-store sales were down 11 percent for the month. Overall comp-store sales for the warehouse club were down 2 percent corporately.
Target reported a slight sales increase, up 2 percent for December to $9.28 billion in December. No mention of CE was made but comp-store sales were down 4.1 percent which was "in line with our planned range," according to Gregg Steinhafel, president/CEO of Target.
BJ's Wholesale Club reported a 3.2 percent gain in sales during December to $1.06 billion compared with the previous year, with comp-store sales up 1.6 percent, excluding gasoline sales.
BJ's did cite TVs, video games and prerecorded video among the categories with the best sales gains in the month.
Bucking the otherwise dismal holiday selling season, Conn's previously reported a 15 percent increase in sales of products and extended warranties for December.
The gain, based on preliminary estimates, resulted in the largest monthly sales volume in the company's history.
Same-store sales were up 5 percent for the multiregional CE and majap dealer on strong growth in electronics, furniture and appliances. Sales of appliances were essentially flat.
The December increases follow a previously reported 23 percent spike in November net sales and a same-store gain of 12 percent.
The NATM Buying Group member does not typically report monthly sales results, but said it released the preliminary sales figures due to current economic conditions.