• by Sarah Mahoney  @mahoney_sarah, January 8, 2007

While deep holiday discounts on those much-coveted flat-screen TVs may pinch profits at many retailers, they gave both Best Buy and Circuit City strong December sales.

Best Buy said yesterday that same-store sales increased 7%--better than it expected.

"Comparable store sales were particularly strong in flat-panel TVs, video gaming, MP3 players and notebook computers," the company said, adding that its conversion rates--the number of consumers who actually bought something--improved. "Our investments in faster checkouts, improved in-stock levels and marketing appear to be paying off for us."

Circuit City said its same-store sales gained 4.2%, as sales in the last two weeks of the month exceeded its expectations.

Both companies saw big gains in online sales. In fact, while many brick-and-mortar retailers led the pack in terms of gains in online spending, Best Buy and Circuit City emerged as Internet all-stars over the holiday season.

Best Buy came in as the No. 1 Web site--ranked by percentage increase in 2006--and Circuit City came in as No. 4, according to comScore Networks, a leader in measuring digital sales. (In terms of total dollars spent, the two ranked as No. 8 and 10, respectively.)

Overall, online holiday retail spending gained 26%, totaling $24.6 billion, according to comScore. For the full year 2006, online retail spending reached $102.1 billion, marking a 24% increase versus 2005.

By Dec. 23, online spending passed the $100 billion mark for the first time ever.