Circuit City (NYSE: CC), like its rival Best Buy (NYSE: BBY), preannounces its sales numbers every quarter. Today, where Circuit City's second quarter was concerned, the electronics retailer echoed other retailers' sentiments regarding sluggish August, compounded by a late Labor Day that also rubbed most retailers the wrong way.
Circuit City said that its overall sales increased 8.9% to $2.35 billion in the second quarter, exceeding analysts' expectations, with same-store sales up 2.9%. Not surprisingly, plasma, LCD, and digital televisions were a particular hit with shoppers, while decreases in tube TV, DVD player, and camcorder sales offset the success in high-end television sales. The company also saw double-digit increases in notebook sales, partially offset by double-digit declines in desktop computers.
Last week, Fool contributor Nathan Slaughter gave us a foreshadowing of Best Buy's quarter; the retailer reported a decent quarter, but it represented a slowdown from last quarter and from the same quarter last year. It also reported increased sales of digital TVs, as well as notebook computers, digital cameras, and MP3 players. (Fancy televisions, of course, have hit the consumers' collective fancy, a trend not lost on Sears (NYSE: S), which recently launched its own high-end television.)
Circuit City's same-store sales number missed analysts' estimates, as they were looking for a 3.5% increase in same-store sales for the quarter. (It doesn't hurt to note that Best Buy also missed same-store sales expectations, with that difficult August likely factored in.) Circuit City's full quarterly report is due Sept. 17.
Although Circuit City shares dipped in today's early trading, whether investors should take a particularly negative view of today's news is a mixed question. Best Buy, a Motley Fool Stock Advisor pick, has been seen as a strong force to contend with in electronics as it gobbles up market share; that part of the equation is nothing new. But some investors are watching for Circuit City to make a turnaround.
On the other hand, August's cool sales have afflicted retailers across the board, so Circuit City's sluggish August should come as no surprise to investors. In addition, there is likely a variety of reasons why consumers might be a bit sedate at the moment. Given the currently unstable time for retailers, it seems prudent that investors might want to reserve judgment.
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Alyce Lomax does not own shares of any of the companies mentioned.
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