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Gregg Appliances Sales Climb 10.6%

2/14/2006 01:11:00 PM Eastern

Indianapolis — The addition of eight new stores during the past 12 months, as well as rise in comp-store sales, elevated fiscal third-quarter revenue at Gregg Appliances 10.6 percent, hitting $281.2 million, up from a year-ago $254.2 million.

Comp-store sales edged upward 1.7 percent in the three months.

Gregg reported its comp-store performance was driven by sales growth in the major appliances and video categories, with video gains in flat-panel TVs outpacing declines in projection and tube sets.

The retailer expects comps to decline between 3 percent and 5 percent in the current quarter, ending March 31, compared with the same three months in 2005, due to declining demand for big-screen projection TVs in favor of plasma and LCD flat-panel technology. During this sales transition, Gregg expects the larger-screen plasma and LCD supply to adjust in the second half of 2006 to compensate for the declining demand for big-screen projection sets.

Net income in Gregg’s third quarter, ended Dec. 31, jumped to $22.6 million, up from $14.6 million in the same quarter in 2004. Net income in the three months included a pretax gain of about $27.9 million on the transfer of a majority of the retailer’s extended service plan obligations to a third party. The gain was partially offset by a $4.6 million increase in pretax interest expense vs. the third quarter of 2004.

Sales for the nine months climbed 13.6 percent, hitting $679.1 million, up from $597.6 million in the same time frame the prior year. The increase was due largely to the eight-store addition, coupled with a 3.2 percent comp-store sales rise. The comp movement was accounted for mainly by a strong performance in the majap and video categories.

Net income for the nine months rose to $18.5 million, compared with a year-on-year $15.1 million. Net income for the first nine months included the $27.9 million gain, partially offset by a $2.5 million pretax charge, associated with the decision to outsource product service and repair work to third-party providers.

Net income for the first nine months included an increase of $13.6 million in pretax interest expense, as well as $16.2 million in income tax expense. Net income for the nine month period in 2004 included the recognition of a $6.7 million charge.