Retail Bouncing Back?
The numbers were the company's best in more than two years. Best Buy operates 600 stores under its own name in the US and 19 in Canada, as well as 108 Future Shop stores in Canada and 22 Magnolia Audio Video stores in the US Pacific Northwest. US sales rose 15% to a $5.43 billion total, with strong performance in the flat-panel TV and camcorder segments. Best Buy also did well with notebook computers and digital cameras. Same-store sales in Canada grew 4% in the quarter. For the nine-month period ended November 29, Best Buy posted total sales of $16.1 billion, a 15% rise year-over-year. The company added 54 Best Buy stores and three Magnolia stores in the past year.
Over the past five years, Best Buy stock has typically declined by about 10% during November and December, only to bounce back by as much as 47% in the first quarter of the new year, according to a recent analysis in the Wall Street Journal. In early December, the company's stock was up 155% year-to-date.
By contrast, the industry's second largest retailer, Circuit City Stores, Inc., reported that total sales for the third quarter ended November 30 declined 1%, to $2.41 billion from $2.42 billion in the same period a year earlier. Comparable-store sales were down by the same percentage. The Richmond, VA–based chain reported that same-store business increased 4% in November, with record sales volume reached on Friday, November 28. "We believe that Best Buy continues to gain market share at the expense of Circuit City," the Journal quoted Lehman Brothers analyst Alan Rifkin, but JP Morgan analyst Danielle Fox opined that "Circuit City is executing better . . . its more aggressive advertising paying off."
Called "Black Friday" by retailers because it is typically the day that their annual balance sheets go positive, the day after Thanksgiving is the fourth busiest shopping day of the year. (The top three are the Saturday before Christmas, December 23, and December 14.) Compared to the same day in 2002, retailing overall jumped 10.9%, according to a December 5 report in the Journal, with consumers spending a whopping $7.2 billion. Laptop computers and digital cameras were among the most popular technological items. Apple Computer noted record traffic in its stores on Black Friday—more than 150,000 shoppers, the highest ever for a single day.
E-commerce is up 25% from the previous year, the report states. US adults will spend an average of more than $900 each on holiday gifts this year, according to the Direct Marketing Association. The National Retail Federation says that 25% of them will buy electronics during the holiday season. The most popular such item? The DVD player.