Best Buy extends lead over rival

Everyone knew Circuit City was having a bad fourth quarter. Which made Best Buy’s good one a little bit of a surprise.

The results reported by the nation’s two largest electronics chains Wednesday showed Best Buy increasing its lead over its smaller rival, with profit up 18 percent, while Circuit City lost money. While Best Buy profits from its operations outside the U.S., including China, and a major push into selling installation and advice in addition to TVs and iPods, Circuit City is closing Canadian stores and replacing 3,400 workers with cheaper help.

Both have their challenges. Price competition is fierce for their most important product, high-end TVs. And sales of compact discs have been falling. But initiatives Best Buy started a few years ago, such as its international operation, its Geek Squad tech support service, and store sections that cater to big-spending customers, are helping offset profit pressures in its core electronics business.

Meanwhile Circuit City has said it will close 62 company-owned stores in Canada. And its layoff of 3,400 of its most experienced (and expensive) sales workers announced last week have left some analysts wondering whether it is losing its best sales people just when it most needs them.

There are bright spots – Circuit City expects revenue in its home-installation service called “firedog” to double to $400 million this year, and it expects to open 40 or more U.S. stores this year, not counting relocations.

•Federated Department Stores Inc. CEO Terry Lundgren, who has led the company’s transition from a regional to a national retailer, received compensation in 2006 valued at about $16.3 million.

Lundgren, 55, who is also chairman and president, received a base salary of nearly $1.4 million.

Federated reported about $2.7 million in compensation to Lundgren through the company’s incentive plan, which rewards performance. Lundgren received just over $243,000 of other compensation, which includes perks such as $141,000 for aircraft travel, more than $48,000 in merchandise discounts, and $15,200 for financial counseling. He received stock or option awards valued at almost $12 million on the date they were awarded in March 2006.

•The new United Artists studio, headed by producing partners Tom Cruise and Paula Wagner, beefed up its executive ranks Wednesday, naming longtime Disney marketing chief Dennis Rice as head of film marketing and publicity.

Rice will report to Wagner and oversee the studio’s worldwide marketing and publicity campaigns for feature films and home video, the company said.