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hhgregg Q3 Profits Fall 20%

1/30/2012 12:01:00 AM Eastern

INDIANAPOLIS – Increased ad
spending and promotions and lower TV
margins led to a 19.5 percent decline in
fiscal third-quarter profits for hhgregg.

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 4
percent.

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 multichannel
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 year.

hhgregg will report it finalized thirdquarter
results on Feb. 8.

And last week the retailer reported
that its longtime executive chairman Jerry
Throgmartin, 57, died.

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