Calendar Clunks Best Buy

The home office category, which accounted for 28% of third-quarter revenue, recorded a 6.5% jump in same-stores sales. Appliances, however, saw same-store sales fall 1.8%. The category accounted for 6% of third-quarter sales.

The company's gross profit rate was flat at 23.5%, partly reflecting a higher mix of revenue toward lower-margin products such as video-game systems and laptops.

But Best Buy said this was offset by a "more rational" promotional environment in the U.S., particularly within the home theater and computing segments. That represents a big improvement for the company, which during the last holiday season was slammed by price cuts and heavy competition from the likes of Circuit City, Wal-Mart(WMT) and Costco(COST).

Tilghman says prices for consumer electronics are holding stronger this year, in part because TV manufacturers are being less aggressive in their efforts to gain market share.

There also is less urgency to wind down inventory of computers. Tilghman points out that last year retailers were trying to get rid of their supplies ahead of Microsoft's(MSFT) launch of Window's Vista.

Moreover, with apparel sales in the dumps this holiday, consumer electronics are topping the wish lists of many shoppers.

"The demand has been high enough so there's no need to be as promotional," Tilghman says.

Weinhart says that while Best Buy may be benefitting from high demand in consumer electronics during the holidays, it is not clear how long that interest will last into next year.

"Once we get past the holidays and there's less reason to be in the stores ... that's when I think we'll see a more significant slowdown in sales trends," he says.

Best Buy projects that its same-store sales for the year will rise 4%, which Weinhart estimates will mean a 2% increase in the fourth quarter.

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