Best Buy Posts Sluggish December Comps

by Alan Wolf -- TWICE, 1/11/2008 8:20:00 AM

Minneapolis, Minn. – 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 United States stores due to comparable-store sales declines from custom install services, extended warranty attachments and sales of MP3 players and projection TVs.

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 to the addition of 127 new stores, including 96 in the U.S., and strength in video gaming, flat-panel TVs, notebook computers and GPS devices, which helped drive increases in the average transaction amount.

In a statement, CEO Brad Anderson cited 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. Interim CFO Jim Muehlbauer said the results met company expectations, reflecting a soft holiday selling season that saw Circuit City’s December comps decline 12.2 percent domestically and hhgregg’s comps rise a moderate 3 percent for the three months ended Dec. 31.

Broken out by category, entertainment software had the strongest growth, posting a comparable store sales gain of 8.2 percent for fiscal December. The gains were driven by solid double-digit comparable store sales growth in video gaming hardware and software, Best Buy said, which was due to the increased availability of hardware and wider assortments of games and accessories. Partially offsetting the growth in video gaming were declines in CDs and DVDs.

Home office posted a 4.7-percent comp sales gain, fueled by a solid double-digit comp increase in notebook computers, which was partially offset by comparable sales declines for printers and monitors.

Despite a decline in domestic majap comps, the category rose 1.8 percent on strength in the international segment.

Comp sales from services rose 1.1 percent, reflecting a solid double-digit comp sales increase in repair revenue and a high single-digit comp sales gain in computing services that were partially offset by comp sales declines in home theater installation and commissions from the sales of extended service contracts.

Comps declined 3.1 percent in CE, as a low double-digit comparable store sales gain in flat-panel TVs and a triple-digit comparable store sales gain in GPS devices were more than offset by declines in projection and tube TVs as well as MP3 devices. Comparable store sales declined slightly for the total television category.

Despite the weak December, Best Buy said it is on track to hit $40 billion in sales for fiscal 2008. The company plans to report its fourth quarter and full year earnings on April 2.