By Mary Ellen Lloyd Of DOW JONES NEWSWIRES Tax refunds, Earth Day promotions and appliance-rebate programs funded by the U.S. government are converging this week in several states to boost sales for retailers. The big-ticket nature of appliances, which are typically five to 10-times the average sales receipt at Home Depot Inc. (HD), Lowe's Cos. (LOW) and Best Buy Co. (BBY), and the category's importance to overall sales mean the retailers could benefit meaningfully as shoppers look to take advantage of specials, according to analysts. Several state programs doling out $300 million in federal stimulus funds for consumers to buy energy-efficient appliances have tapped out their rebates within hours. About 30,000 people exhausted Arizona's $6.2 million program in three and half hours Monday, and another 30,000 people were put on a waiting list, said state Department of Commerce spokesman David Drennon. Some stores even saw shoppers who were unable to secure rebates buying anyway. Pacific Sales Kitchen & Bath, a unit of Best Buy, opened its Chandler, Ariz., store on Monday, when it's usually closed, because of strong customer interest. "It was just an exciting day to sell appliances," said store manager Krystyn Moroz. "It's not just people coming to check out appliances. People were serious and were saying, 'We're ready to go.'" Last month Best Buy reported a 6.5% increase in fourth-quarter U.S. comparable-store sales of appliances, which represented about 4% of total U.S. sales across its brands. Texas, with one of the largest programs across the U.S., gave out all of its reservations in one day for $23.3 million in rebates, which must be used on purchases between April 16 and April 25. Conn's Inc. (CONN) holds about 5% to 7% of the state's market share in appliances, so it could add as much as a couple of percentage points to its same-store sales in the first quarter, Jefferies analyst Dan Binder said in a recent note. Other state programs look for similar scenes. "Our expectation is that the demand will be greater than the supply," said Judd Slivka, a spokesman for the Missouri Department of Natural Resources. Missouri's program begins offering rebates through retailers April 19, but the state is also exempting qualified purchases from the state's 4.225% sales tax for a week. Some local governments, too, are waiving taxes on certain appliances. Florida's $17.5 million lottery-like program, which provides 20% rebates on certain appliances, is expected to start and end on Friday. Retailers declined to comment specifically on how much business they've gained or hope to gain, but many are running their own discounts or promotions, such as free delivery, on top of the state-administered rebates. The timing of some programs coincides with people getting tax refunds, which the IRS has said are averaging about 10% above last year's refunds. Home Depot plans to unveil some special promotions around Earth Day on April 22 as it looks to leverage what the states are doing, said Ron Jarvis, vice president of environmental innovation. The world's largest home-improvement retailer is the third-largest U.S. appliance dealer after Sears Holdings Corp. (SHLD) and Lowe's, generating about 6% of sales from appliances. So far, Home Depot has "seen some very positive movement" in its appliance business when the various state programs have begun, and the retailer expects it will get its fair share of sales, Jarvis said. Similarly, Lowe's is "seeing some success" in markets where the state programs have begun, said Craig Weber, vice president of merchandising. "We're certainly seeing some positive momentum," he said. Appliances represent about 10% of Lowe's sales and are the home-improvement center's largest product category. J.P. Morgan estimates Home Depot's earnings per share this year could see a 2.5% lift from sales tied to the U.S. subsidy, with a 5% lift for Lowe's earnings and a 3% increase for Best Buy. Sears, which generated about 15% of fiscal 2009 revenue from its home-appliance business, has been opening stores early and keeping some open late in concert with the launch of various states' programs. "In general the customer interest is directly tied to how strong the offer is in a given state," said Sears spokesman Larry Costello. "It varies by state but we have had stores where we've had lines." U.S. appliance sales, while still weaker than a year ago, have been slowly showing signs of a turnaround in recent months as the housing market improves a little and as consumers get a little more confident in their own outlook, NPD Group analyst Mark Delaney said. Unit and dollar sales of dishwashers rose about 6% in the 12 months ending in February, the most recent month for which data was available, compared with a year earlier, according to the consumer-research firm. And other appliance categories are posting smaller year-over-year declines than they were last year. Overall, appliance sales decreased 2.6% in dollars and fell 3.2% in units in the 12 months ending in February. -By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com
