Best Buy CEO Hubert Joly said he wanted the company to come out swinging this holiday shopping season. Judging by initial reports of the Black Friday weekend, the consumer electronics chain did not disappoint.
Thanks to aggressive promotions, reinvigorated video game and television categories, and a 6 p.m. Thanksgiving opening, Best Buy appears to have generated strong weekend traffic and picked up market share.
"Best Buy held its own," said David Strasser, a retail analyst with Janney Capital Management.
Wall Street also seems to think so: Best Buy shares rose 53 cents to close Monday at $41.48.
Companies typically don't release their sales data so soon, so it's difficult to gauge individual performances. But some reports suggest that Richfield-based Best Buy fared well.
Placed, a Seattle-based analytics firm, said Best Buy attracted the third-highest share of Black Friday visitors among major retailers, just behind Wal-Mart Stores Inc. and Minneapolis-based Target Corp. Perhaps more important, Best Buy achieved the ninth-largest market share gain compared with the previous week.
"Best Buy has come out of the gate strong," said Brian Yarbrough, a retail analyst with Edward Jones Investments. "They caught Wal-Mart a bit by surprise."
While some analysts worried that Best Buy's aggressive discounting of televisions and computers would hurt profits, sales of related accessories and services such as Geek Squad, which carry higher margins, "have been strong," Scott Durchslag, Best Buy''s president of e-commerce, said on Monday.
"We're selling a lot of accessories," Durchslag said. "We're encouraging shoppers not to just buy the smartphone but also to personalize it with a case. These things are really doing well for us."
In addition, Best Buy's focus on improving its in-store experience seems to have paid off, with the retailer capturing sales in a "broader mix of categories and a richer mix of business," according to a report by Goldman Sachs. The report also named Wal-Mart and Macy's as big winners over Black Friday weekend.
Across the industry, the news was less encouraging. In general, consumers haven't really recovered from the economic shock of the Great Recession, analysts say.
The conservatism is reflected in the Black Friday numbers. From Thursday to Sunday, consumers spent an average of $407.02, a 4 percent decline from the same period in 2012. With one less week in the holiday shopping season this year, "it's going to get pretty scary for retailers" come Christmas, Strasser said.
"Between Black Friday and Christmas, there are fewer days so each day needs to be really good," said Gerald Storch, president of the Storch Advisors consulting firm in New York and a former top executive at Toys R Us and Target. "It's not a game for the timid right now."
Investors have been especially bearish on Target in recent weeks. Target has been reluctant in the past to discount as heavily during the holiday shopping season as its competitors. Target has agreed to price-match rivals, but the retailer still hasn't been willing to go toe-to-toe with Wal-Mart in original holiday pricing across multiple categories, Strasser said.
Target also seems to be running into inventory problems again, especially with toys. The retailer was out of stock in 67 percent of the top holiday toys compared with 44 percent for Wal-Mart and 31 percent for Kmart, according to a pricing study by Bloomberg.
Still, there was good news for Target. Online traffic and sales on Thanksgiving were among the highest Target has seen in a single day, especially in mobile. Many consumers began to shop early in the day, as both traffic and sales got off to a fast start.
Thomas Lee • 612-673-4113
