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On Friday, Best Buy and Circuit City reported knockout December sales that beat analyst estimates. Best Buy posted a 7% CC vs. BBY chartincrease in same-store sales, while Circuit City reported a 4.2% jump. Analysts had estimated sales growth of 4.9% for Best Buy and 3.3% for Circuit City. Both companies raised FY guidance: Best Buy raised EPS from $2.65 to $2.80 to $2.70 to $2.80/ share; Circuit City raised annual sales growth to 9-10%, up from 8-9%. Increased consumer demand combined with deep discounts for flat-panel televisions and video-game consoles were responsible for the strong holiday sales. This news follows both companies' December share drop caused by tepid Q3 results. Best Buy shares rose 16 cents to $50 on Friday while Circuit City fell 71 cents, or 3.6%, to $19.29 after the company said sales growth might slow down for the rest of Q4.

• Sources: Bloomberg, Marketwatch.com, NYTimes, Reuters
• Related commentary: Circuit City and Best Buy Show Profitless Prosperity in LCD TV Sales, How Flat Panel Retail Pain Translates Into Consumer Gains, The Housing Market is Hitting Demand for Flat Panel TVs Conference call transcripts: Best Buy F3Q07 (Qtr End 11/25/06) Earnings, Circuit City F3Q07 (Qtr End 11/30/06) Earnings
• Potentially impacted stocks and ETFs: Circuit City (CC), Best Buy (NYSE:BBY) Competitors: Radio Shack (NYSE:RSH), Wal-Mart (NYSE:WMT). ETFs: Retail HOLDRs (NYSEARCA:RTH), Consumer Discretionary SPDR (NYSEARCA:XLY)

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Source: Best Buy, Circuit City Surprise Analysts with Strong December Sales