If you believe Best Buy to be a good proxy for retail…
Best Buy 3Q Profit Rises, Boosts Outlook Tuesday December 18, 9:03 am ET
Best Buy Earnings Rise 52 Pct in 3Q on Sales of Flat-Panel TVs, Boosts Full-Year Outlook
MINNEAPOLIS (AP) — Best Buy Co., the nation’s biggest consumer electronics retailer, said Tuesday its third-quarter profit jumped 52 percent, boosted by holiday shopping and sales of higher-ticket items such as flat-panel TVs.
The results beat Wall Street expectations and the company boosted its outlook for the year.
Its shares rose more than 2 percent in premarket trading.
Profit for the quarter ended Dec. 1 rose to $228 million, or 53 cents per share, from $150 million, or 31 cents per share in the prior-year period.
Revenue rose 17 percent to $9.93 billion, from $8.47 billion last year.
Analysts polled by Thomson Financial predicted a profit of 41 cents per share on revenue of $9.44 billion. The earnings estimates typically exclude one-time items.
Same-store sales rose 6.7 percent, helped by higher average selling price and a calendar shift that added an extra week of holiday shopping to the quarter. Same-store sales, or sales at stores open at least fourteen months, is a key indicator of retail performance since it measures growth at existing stores rather than newly opened ones.
Results were helped by a shift toward higher-ticket items such as video-game consoles, notebook computers, flat-panel TVs and GPS devices.
The company boosted its fiscal 2008 earnings outlook to between $3.10 and $3.20 per share, from a previous range of $3 to $3.15 per share. The company expects revenue of about $40 billion for the year.
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Unfortunately, because the just completed quarter contained an extra week (an important one too: the one right after Thanksgiving) it is hard to interpret.
Excluding that extra week, they said same store sales were up 3.6%. Electronics comparable sales were up only 2.4% – including the extra week. The strongest segment was video games and consoles due to a lot of new releases.
I think we’ll have to look at the 3rd and 4th quarters combined and compare them to last year to really get a good feel for how their business is doing.
You’re right, I should have noted that the sales numbered are a bit inflated due to the calendar shift. Nonetheless, analysts had that baked into their estimates, so it does not negate the strength of Best Buy’s report.
In the light of the just announced CircuitCity results, the BestBuy data does not look that impressive.
It seems they were able to gain on CircuitCity’s back and the combined BestBuy/CC results, it seems, do confirm the decline in customer spending.