hhgregg Reports Double-Digit Gains In Q3 Sales, Earnings

by Alan Wolf -- TWICE, 2/14/2008 6:17:00 AM

Indianapolis — Multi-regional brown- and white-goods chain hhgregg reported a 16.5 percent increase in net sales, to $390.4 million, and a 39 percent increase in net income, to $15.1 million, in its third fiscal quarter, ended Dec. 31.

Same-store sales rose 3 percent during the three-month period.

The company attributed the holiday period gains to five new store openings, bringing the store count to 85, and margin improvement across all major categories thanks to strong sales of higher-ticket TVs, majaps and mattresses.

“Our sales and margin performance was strong in all key merchandise categories and flowed through well to our bottom line,” said chairman/CEO Jerry Throgmartin. “We believe that our results underscored our competitive strengths and unique positioning within our sector. During the competitive holiday season, we remained focused on providing an excellent value proposition, while differentiating ourselves through a superior customer purchase experience led by our consultative sales force.”

The comp-store increase reflected double-digit growth in big-ticket LCD TVs and higher-end appliances including front-load washers and French door refrigerators, the company said, offsetting declines in tube and rear-projection TVs and entry- and midlevel majaps. Flat panel displays now represent 85 percent of all TV sales at hhgregg, with microdisplay sets comprising most of the balance.

All told, video sales rose 2.2 percent for the quarter while white goods slipped 0.7 percent. The company also enjoyed a 13.3 percent comp increase in its catchall “other” category which includes notebook computers, mattresses, personal electronics such as GPS devices and digital picture frames, and furniture and accessories.

During an analyst call this morning, president/chief operating officer Dennis May said the retailer made a concerted effort to improve the performance of its small electronics business, located in the center of its stores, by changing its marketing and merchandising teams, and has enjoyed increased sales and traffic as a result.

Throgmartin added that the chain gained market share in a challenging economic environment by delivering a superior customer experience; offering competitive pricing; adapting quickly to changing market conditions; and through a consultative selling floor that helped boost its mix of more profitable large-screen 1080p-120Hz LCD TVs.

The company plans to open seven new stores during the current quarter in Ohio, North Carolina, Tennessee and Northern Florida, and two regional distribution centers, in Jacksonville and Orlando, Fla.

Looking ahead, hhgregg is projecting flat same store sales for the current quarter, but expects stable pricing and continued growth in better LCD TVs for the remainder of the year. Sales of high-end appliances also remain “significantly vibrant,” May said.