With few exceptions, the holiday period proved problematic across the board for retailers, which generally reported tepid sales for December.
Among CE specialty chains, Best Buy's same-store sales rose 3 percent on an adjusted basis company-wide during the critical five-week period, ended Jan. 5, and increased a modest 2.1 percent in its U.S. stores.
Without the benefit of the adjustment, company-wide comps rose 1.5 percent and U.S. same-store sales were flat at 0.3 percent due to a shift in the chain's fiscal calendar that moved a week of post-Thanksgiving sales from December to November.
Net sales for the five weeks were up 11 percent to $7.3 billion company-wide and grew 8 percent to $6 billion domestically thanks in part to the addition of 127 new stores, including 96 in the United States.
In a statement, CEO Brad Anderson focused on the company's consistent execution, which contributed to gains in market share, customer loyalty and employee retention. "These strategic indicators fuel our confidence in our ability to generate profitable growth," he said, and will lead to future growth opportunities. Indeed, despite the weak December, Best Buy said it is on track to hit a record $40 billion in sales for fiscal 2008.
Meanwhile, Circuit City's December sales slipped 8.9 percent to $1.9 billion and same-store sales fell 11.4 percent due to disruptions from ongoing turnaround efforts, the company reported Monday.
Total sales at domestic stores decreased 10 percent to $1.8 billion while U.S. comp-store sales fell 12.2 percent year over year.
In a statement, CEO Phil Schoonover said the results were disappointing but in line with projections, and that significant sales gains over the last half of the month were insufficient to offset year-over-year declines during the prior two weeks.
"Our efforts to turn around the business have led to greater disruption than we anticipated," he said, "but we continue to believe that we are on the right path to return to sustainable, profitable growth and increasing shareholder value."
Schoonover said the chain is taking a number of actions to improve performance, including fixing its close rate and attachments by empowering sales associates with the knowledge and tools needed to improve both sales and margin. The chain wants to improve its gross margin rate through merchandising, marketing and pricing discipline; cutting costs and further aligning the workforce structure with strategic goals; expanding sales of its Firedog services and its direct-channel businesses; as well as relocating, remodeling and opening new stores.
Also reporting was hhgregg, which said same-store sales rose a modest 3 percent during its fiscal third quarter, ended Dec. 31, 2007. The multi-regional brown- and white-goods chain also cautioned that the retail climate may get even tougher during the current quarter.
In a statement, CEO Jerry Throgmartin said the company was "very pleased with our execution" during the critical October to December period, and that the comp gains came on top of a 5.6 percent increase in 2006. He added that current quarter, ended March 31, will likely be "more challenging … given the general economic environment and slowing traffic patterns. We will continue to execute on our store growth plan and will be focused on delivering a superior customer purchase experience."
One holiday bright spot was GameStop. The world's largest video game specialty chain rode the category's popularity to a record holiday period, with net sales rising 34.7 percent to $2.3 billion and comp-store sales growing 20 percent for the nine weeks ending Jan. 5.
Among national discount chains, Wal-Mart said net sales at its flagship discount stores rose 5.6 percent to $29.7 billion and comp-store sales rose 2.6 percent for the five weeks ending Jan. 4, driven in part by across-the-board strength in CE. "In a difficult retail environment, we were pleased with our comparable-store sales during this period," said Eduardo Castro-Wright, president/CEO of Wal-Mart Stores U.S. "Our price leadership position was clear very early in the holiday season, and customers responded throughout the period to our pricing and merchandise offerings, which were supported by well-integrated advertising and in-store communications."
At Target, slower traffic led to flat net sales of $9.2 billion and a slight 0.6 percent decline in calendar-adjusted same-store sales. Bob Ulrich, who announced his retirement as CEO, effective May 1, said sales were in line with mid-month projections and would likely lead to a decline in fourth-quarter earnings. Ulrich, who turns 65 in April, will stay on as chairman through the end of fiscal 2008 and will be succeeded as CEO by Target president Gregg Steinhafel.
Within the wholesale club channel, Costco said net sales rose 10 percent company-wide to $7.6 billion for the five week, ended Jan. 6, while U.S. comp sales rose 4 percent, excluding the effect of recent gasoline price hikes.
At Wal-Mart's Sam's Club division, net sales rose 4.3 percent to $4.9 billion for the five weeks ending Jan. 5 and same-store sales increased 1.3 percent excluding sales of gasoline.
At BJ's Wholesale Club, net sales for December increased 6.2 percent to $1 billion and comp sales rose 3 percent, including sales of gasoline.
Elsewhere, Ritz Interactive, the e-commerce platform that includes RitzCamera.com and WolfCamera.com, as well as boating and other online-shopping sites, reported a 22 percent spike in product sales for the fourth quarter and full-year gains of 12 percent to $111 million in 2007. President/CEO Fred Lerner said a Pay-Pal holiday promotion offering customers 10 percent off at check-out helped boost sales almost 20 percent. Ritz also received a lift from its continued expansion into CE and home office, he said.
Sharper Image said net December sales slipped 17 percent to $97.2 million and comp sales fell 10 percent.
For more comments from top retailers on holiday retail sales and the prognosis for 2008, check coverage of the annual TWICE Retail Roundtable and the CES Industry Insiders stories on p. 4.