hhgregg’s Q2 Sales, Profits Climb

By Alan Wolf -- TWICE, 11/6/2008

Indianapolis — hhgregg reported strong second-quarter sales and earnings but a slump in same-store sales.

Net sales rose 11.3 percent to $320.3 million, due largely to the addition of 23 stores over the past 12 months.

Net income for the three months, ended Sept. 30, was $3.4 million, compared with a year-ago loss of $6.9 million stemming from an early extinguishment of debt.

Same-store sales slipped 8.8 percent, reflecting weakness in major appliances and tube and rear-projection TVs, as economic uncertainty and growing unemployment contributed to a “significant drop in customer traffic during the last two weeks of September,” the company said. The volatility led the multiregional chain to project same-store sales declines of between 10 percent and 17 percent for the back half of its fiscal year ending March 31.

In a statement, chairman/CEO Jerry Throgmartin said the company will continue to position itself for sales and market share growth while controlling costs and adjusting its operating and expansion plans in the current economic climate.

The company expects to open five more stores in Florida by the end of March for a total of 13 in the Sunshine State and approximately 110 nationwide in 10 states. It plans to pay for the expansion and all other capital expenditures — which will total between $29 million and $31 million this fiscal year — entirely from its free cash flow.

On the product front, comp-store sales of major appliances fell 15.2 percent. Sales were weakest within the entry-level and lower midprice tiers, while refrigeration and high-efficiency front-load laundry experienced flat to “modestly positive” comp-store unit sales gains and contributed to higher average selling prices for the majaps category.

Within video, comp sales slipped 0.6 percent due to continued declines in tube and projection TV sales, which were partially offset by double-digit comp increases in flat-panel LCD TVs.

The company also reported comp-sales declines in personal electronics and mattresses.

“We were pleased with the resiliency of our business model which has performed well in a difficult economic environment,” said president/COO Dennis May.