Two major retail computer chains released disappointing sales figured for November today, and both blamed the downturn on a soft market and excessive promotions from PC vendors.
Both Circuit City Stores Inc. and Best Buy Co. Inc. reported an 8 percent drop in comparable store sales for November. (Comparable, or same store sales, discount the sales from stores that were built since the year-ago period.) Including the new stores, Circuit City had sales of $748.7 million, an 8 percent increase from the year before. Best Buy had total sales of $767 million, 2 percent more than in November of 1995.
The two companies used almost identical language in explaining the declines.
"Third quarter sales were well below earlier expectations. The personal computer category became more promotional in November," Best Buy Chief Financial Officer Allen Lenzmeier said in a release.
"As we entered the holiday season, we were hopeful that the industry would show some improvement. Instead, industry sales trends remained weak and promotional activity intensified," Circuit City CEO Richard Sharp said in his company's release.
For the quarter, Circuit City announced that it expects to lose about 20 cents per share. The Richmond, Va., company will release earnings in mid-December. Overall quarterly sales were $1.86 billion, 4 percent more than the year before.
Best Buy reported overall quarterly sales of about $2.01 billion, also 4 percent more than the year before.
Retailers had been hoping for a better holiday season this year than last, when consumers virtually abandoned shopping malls. Retail sales in general have increased, but there has been concern from PC retailers that consumers are waiting out price cuts as well as the release of Intel Corp.'s multimedia extension technology in January before making purchases.