U.S. Markets closed

Best Buy revamps home theater section

Mae Anderson, AP Retail Writer

This undated photo provided by Best Buy shows the redesigned home theater department at a store in Rochester, Minn. Best Buy is revamping its home theater department with single-brand “store-within-a-store” areas for Samsung and Sony as it seeks to boost sales of TVs and speaker systems. (AP Photo/Best Buy)

NEW YORK (AP) -- Best Buy is revamping its home theater department with single-brand "store-within-a-store" areas for Samsung and Sony as the retailer seeks to boost sales of TVs and speaker systems.

Beginning in May, areas dedicated to Sony home theater products ranging from TVs to video game consoles will be in 350 stores. And Samsung areas with that company's home theater products will be in 500 stores.

Best Buy is trying to fend off increased competition from discount retailers such as Wal-Mart and online stores such as Amazon.com.

The electronics and appliance seller has been tinkering with its store format in a variety of ways since it brought in CEO Hubert Joly almost two years ago to lead a turnaround. The company has tested smaller stores and and dedicated store space for top brands like Apple, Samsung and Microsoft.

The new effort is intended to boost TV sales, which have been sluggish industrywide as gadgets like tablets and smartphones have captured shopper attention and dollars. Unit sales of TVs fell 7 percent in the first quarter and revenue fell 9 percent to $3.4 billion, according to NPD data.

Meanwhile, Best Buy's home theater sections have not changed for years, even though TVs have been getting bigger and bigger, said Stephen Baker, consumer technology analyst with research firm NPD Group. Forty-inch TVs used to be considered large, but now 60-inch and 70-inch are standard and 40-inch TVs are among the smaller offerings.

"It is clearly going to be a positive thing, they haven't done much in that department," Baker said. "It was an opportunity to ask, 'How do we better merchandise these great big TVs?' "

Other improvements to the department include rebuilding its TV wall, which displays TVs from brands like Toshiba and Panasonic, and letting customers pick up TVs that are 40 inches or smaller from shelves themselves.

There are signs that changes under CEO Joly have been working. In its most recent quarter, Best Buy returned to a profit in the fourth quarter as it cut costs to offset declining sales. The company said it gained market share during the quarter, too.

But weak sales remain a sticking point. Revenue in stores open at least 14 months, a key retail metric, fell 1.2 percent in the U.S. during the quarter, which includes the key holiday season. November and December can account for up to 40 percent of total sales for retailers.

Best Buy shares rose 23 cents to $26.16 in morning trading. The stock is down 35 percent so far this year.