Best Buy, Circuit City See Holiday Sales Surge
Retailers who wondered where their customers went during a so-so holiday season might have tried looking in the TV aisles at Best Buy and Circuit City.
On Friday, the nation’s two largest consumer electronics retailers reported strong holiday revenue, driven by surging sales of high-end televisions and larger average purchases. December sales jumped 5.8% at Best Buy Co. stores open at least 14 months. The increase was 10.8% at Circuit City Stores Inc. locations open at least a year, a key industry barometer of a retailer’s health.
Best Buy said its fiscal fourth-quarter earnings would be near the top of its earlier guidance of $1.06 to $1.16 a share. Its stock rose $3.55, or 8.2%, to $47.05.
Circuit City shares rose 15 cents to $22.94. Best Buy’s stock had been knocked down from about $50 a share in December by a disappointing outlook, and Circuit City’s stock had been climbing steadily from about $16 a share in September.
Both companies said sales of flat-panel TVs more than doubled at existing stores, and they reported double-digit percentage increases in digital audio player sales. Both reported declines in sales of DVD players, for which prices had been falling.
They said video game hardware sales rose during the first full month of Xbox 360 sales, although Best Buy said video game software declined as customers slowed purchases for existing platforms.
Both companies said overall revenue rose 12% from December 2004, to $5.7 billion for Best Buy and $1.98 billion for Circuit City.
Craig R. Johnson, president of retail consulting firm Customer Growth Partners, said the two companies posted the strong results despite tough competition from Wal-Mart Stores Inc. and other discounters jockeying for TV customers, and despite the wide availability of the iPod music player. Those kinds of products once belonged mostly to Best Buy and Circuit City, but they’re getting easier to find in nonelectronics stores and online.
Both companies reported strong gains in Web sales. Best Buy’s online revenue jumped 40% as more customers shopped and redeemed gift cards online.
Circuit City reported strong growth in its “Web-originated sales,” which rose 49% in December compared with the same month in 2004.
