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hhgregg Q2 Profits Up 46%

– hhgregg said it grew its second-quarter profits 46 percent by increasing
sales, lowering costs and maintaining gross margins.

Net income was $4.9 million on net sales of $332.2 million for
the three months, ended Sept. 30. Net sales rose 3.7 while comp-store sales
fell 9.4 percent.

“We are pleased with our quarterly operating performance and our
ability to drive growth in earnings and operating cash flow by preserving
margins and managing expenses, all while continuing to add new stores,” said
president/CEO Dennis May.

In a conference call, May said he was optimistic about the
holiday season and the post-holiday quarter based on improving traffic and
sales trends. He also projected  a return
to “normal growth” in the appliance business next year, and a stabilization in
average TV selling prices as consumers gravitate toward large-screen models
with advanced features like LED backlighting, wireless connectivity and 3-D

He added that the company has already secured 40 leases in the Mid-Atlantic States and will begin an aggressive rollout
in that region by February. The expansion will be fueled by a recent stock
offering that raised $78 million for the retailer’s war chest.

The chain added seven news stores during the quarter and opened
its first Mississippi
location this month, bringing the current store count to 126.

The retailer attributed the quarter’s 9.4 percent comp decline to
weak demand for video and appliance products. Comps fell 16 percent in video
and 7.5 percent in appliances during the three months, but increased by the
triple-digits in computers.

Comp declines in TVs were largely due to lower selling prices as
customers opted for smaller screen sizes. In contrast, sales “significantly
improved” in appliances despite continued comp-store declines.