Indianapolis, Ind. - Increased ad spending and promotions and
lower TV margins led to a 19.5 percent decline in fiscal third-quarter profits
The multi-regional CE and appliance chain earned $22.5 million
for the three months ended Dec. 31 on net sales of $829.5 million, according to
preliminary estimates, as the company sought to grow market share through
increased promotions and advertising. Sales rose nearly 27 percent, driven in
part by continued regional expansion, and comparable store sales increased almost
Most of the growth and much of the ad spend was in home office, a
relatively new category for the retailer, where comp sales rose 91.4 percent.
Majap comps also grew, by 6.8 percent, while video declined 4.8 percent.
"Our recent initiatives focused on driving market share gains in
the appliance and home office categories are clearly gaining traction," noted
president/CEO Dennis May. "However, the video industry experienced heavier-
than-expected promotional activity across all screen sizes, which negatively
impacted industry average selling prices and margins," and pressured results
beyond company projections.
Nevertheless, hhgregg believes it maintained its TV market share during
the quarter and said it is pleased with its performance in new markets. During
the quarter the company also invested in new mobile product offerings and a new
web platform to enhance its multi-channel strategy.
"We are excited about our positioning in the marketplace as we
continue to execute on these important initiatives and enhance our overall
customer shopping experience," May said.
Looking ahead, the company has lowered its annual earnings
guidance and comp sale projections as industry-wide pressure on TV sales and
margins continue into its fiscal fourth quarter, CFO Jeremy Aguilar said.
The chain plans to open 35 new stores during its next fiscal
hhgregg will report it finalized third-quarter results on Feb. 8.
Indianapolis, Ind. - Increased ad spending and promotions and lower TV margins led to a 19.5 percent decline in fiscal third-quarter profits for hhgregg.