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hhgregg Posts Higher Sales, Lower Profits

11/22/2010 12:01:00 AM Eastern

INDIANAPOLIS — hhgregg reported lower
margins but higher sales in its fiscal second
quarter, reported “significant volatility” in the
marketplace, but said it would continue its
expansion next year.

The chain said there were higher expenses,
lower margins and a drop-off in major
appliance demand which hurt profits in the
company’s second fiscal quarter.

Yet the CE and appliance chain plans to
open upward of 45 new stores next year in
Miami, western Pennsylvania and other markets,
on top of the 51 new locations added
over the past 12 months.

Net income declined 20.4 percent to $3.9
million for the three months, ended Sept. 30,
while net sales surged nearly 45 percent to
$480.9 million, due largely to the new-store
build out.

Comp-store sales declined 1.5 percent
during the period, which the chain attributed
to a 3.9 percent decrease in appliance
comps as the federally funded majap rebate
program pulled demand into the prior
quarter.

An oversupply of TVs and weak demand
for new video technologies will result in lower
prices and compelling vendor promotions
for 3D TV, IPTV and larger-screen LEDs beginning
Black Friday and continuing through
Super Bowl, hhgregg president/CEO Dennis
May said.

May said a decrease in 3D TV retails, to
a $1,199, $1,299 and $1,499 step, “moves
compelling product into a power alley price
point,” while still providing solid margins
and moving consumers away from a $499
purchase.

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