Gregg Appliances Posts Higher Quarterly Sales, Net Income
By Steve Smith -- TWICE, 7/3/2006
INDIANAPOLIS — Gregg Appliances reported higher sales and net income for its fiscal fourth quarter, ended March 31.
Gregg Appliances reported a 7.7 percent increase for the quarter, to $221.3 million, compared with $205.6 million for the comparable prior year period. The chain said the increase in sales was attributable to the addition of nine stores offset by a 2.7 percent decline in comp-store sales in the fourth quarter of 2006 as compared with the comparable prior year period.
The comp-store sales decline was primarily driven by declining consumer demand for big-screen projection televisions in favor of plasma and LCD flat-panel technology, Gregg reported.
Net income for the fourth quarter was $3.7 million, compared with $14.1 million for the year-ago period. Net income for the fourth quarter included $2.4 million for income tax expense while net income for the fourth quarter of fiscal 2005 included an income tax benefit of $14.8 million, $4.7 million in transaction costs related to Gregg Appliances' recapitalization and the recognition of a $2.6 million charge to reflect the increase in fair market value of certain variable stock-based awards.
Sales for the fiscal year increased 12.1 percent to $900.4 million, compared with $803.2 million for the comparable prior year period. This increase in sales was attributable to the addition of nine stores and a 1.7 percent rise in comp-store sales in fiscal 2006. The comp-store sales performance was primarily driven by sales growth in major appliance and video categories, with gains in flat-panel televisions outpacing the sales decline in projection and tube television sales.
Net income for the year ended was $22.2 million, compared with $29.2 million for the comparable prior year period. Net income for fiscal 2006 included a $27.9 million gain on the transfer of extended service plan obligations to a third party, partially offset by a $2.4 million pretax charge, in the aggregate, associated with the decision to outsource product service and repair work to third-party providers.
Net income for fiscal 2006 also included an increase of $15.1 million in pretax interest expense vs. the comparable prior year period due to Gregg Appliances' recapitalization, as well as $18.7 million in income tax expense. Net income for fiscal 2005 included the recognition of a $9.3 million charge to reflect the increase in fair market value of certain variable stock-based awards.
Gregg commented in its statement that its video business is undergoing a transition as a result of declining consumer demand for projection televisions in favor of plasma and LCD flat-panel technology, coupled with an industry-wide supply shortage of larger flat-screen televisions.
Supply of large flat-screen televisions has improved sequentially since March and is expected to continue to improve during the second half, the chain said.
The company plans to open nine or 10 new stores during its current fiscal year.
