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hhgregg Q3 Profits Fall 16.5%

2/08/2012 08:55:27 AM Eastern

Indianapolis - Holiday
TV promotions and increased ad spending took a toll on hhgregg's profits in its
fiscal third quarter.

Net income for the
multiregional CE, majap and furniture chain fell 16.5 percent to $22.5 million
for the three months, ended Dec. 31, while the addition of 35 new stores over
the trailing 12 months boosted net sales nearly 27 percent to $829.5 million.

Comp-store sales
increased 3.9 percent during the quarter on strength in major appliances and
home office, which partially offset declines in video, camcorders and personal
electronics.

Majap comps rose
6.8 percent on increased demand and higher average selling prices (ASPs), which
the company attributed to initiatives designed to grow market share and outpace
the industry in comp store sales growth. The category comprised 30 percent of
hhgregg's total sales at the end of the quarter.

Comp sales of home
office products, comprised mainly of computers, mobile phones and tablets, rose
91.4 percent during the period. The category represented 11 percent of total
sales, up from 6 percent last year.

Video, the
company's largest category with 46 percent of sales, saw comps fall 4.8 percent
due to a mid-single digit decrease in ASPs, partially offset by increased unit
demand.

The company also
reported a 7 percent decline in its catch-all "other" category, comprised of
audio, personal electronics, furniture and accessories, and mattresses. The
decrease was primarily driven by double-digit comp declines in camcorders and
small electronics, partially offset by strong double-digit growth in mattresses.

Gross profit
margin fell 8.1 percent to 27.2 percent during the quarter due largely to
increased TV promotions and the sales gains in home office, a category that
carries a lower gross profit margin than the company average.

"While pleased
with our overall comparable store sales increase of 3.9 percent and market
share gains during the third fiscal quarter, we were disappointed with the
macro trends across the video category," president/CEO Dennis May said in a
statement.

He added that the
majap and home office initiatives spurred "significant" market share gains in both
categories and continue to boost revenue and gross margin dollars per store.

The company
currently operates 208 stores across 16 states.

 

 

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