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Best Buy Sings December Blues

9 Jan, 2009 By: Erik Gruenwedel

Revenue declines in computer electronics and packaged media (movies and music) contributed to Best Buy Co. posting a 6.5% same-store (open at least 12 months) sales decline for the December sales period ended Jan. 3, compared to a 1.5% increase during the previous year period ended Jan. 5, 2008.

The entertainment software revenue category, which comprised 25% of the Minneapolis-based chain’s fiscal December domestic revenue, experienced a comparable-store sales decline of 12.2%. Music CDs and DVD movies experienced double-digit comp-store declines.

Consumer electronics, which represented 44% of December’s domestic revenue, posted an 8.7% comp-store decline, despite double-digit comparative-store sales gains for flat-panel TVs.

Strong TV sales were offset by same-store sales declines in digital cameras and MP3 players, which experienced a reduction in consumer demand during the month. In addition GPS products had significant declines in average selling prices, which more than offset TV’s double-digit unit increases.

Video game same-store sales fell by the mid-single digits, primarily due to a shift toward software and reduced sales of large-ticket consoles, in addition to unfavorable comparisons with stronger results last year.

Total revenue increased 4% to $7.5 billion, due in part to the inclusion of Best Buy Europe results and the addition of 194 new stores in the past 12 months.

“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, in a statement from the 2009 International CES confab in Las Vegas. “In this light we believe the market share gains we’ve been making will be sustained.”

Separately, Best Buy said 500 of its 4,000 corporate employees elected to take voluntary severance packages offered last month. The enhanced severance agreements included seven months pay (compared to the conventional 90 days) and extended healthcare.

Company officials haven’t announced whether involuntary cuts with reduced benefits at the corporate level are forthcoming.

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