Financial Results and HHGregg and Retailers and Retail and Real Estate & Retail

HHGregg shares sink on disappointing earnings

January 10, 2012

Appliance and electronics retailer HHGregg Inc. said Tuesday that it expects its fiscal third-quarter earnings to decline, hurt by lower-than-expected profit margins in the video-product category and higher spending ad .

Its shares fell more than 15 percent in Tuesday trading.

The Indianapolis-based company expects earnings of $22.5 million, or 60 cents per share, for the three months that ended on Dec. 31. That's down from $26.9 million, or 66 cents per share, in the same period a year ago.

HHGregg expects revenue of $829.5 million, up 27 percent from $653.7 million.

Analysts, on average, were expecting earnings of 77 cents per share on revenue of $811.8 million, according to a poll by FactSet.

Dennis May, HHGregg president and CEO, attributed the disappointing earnings partly to falling prices and tighter profit margins for flat-screen televisions.

“The video industry experienced heavier than expected promotional activity across all screen sizes, which negatively impacted industry average selling prices and margins,” May said.

HHGregg estimated that its sales at stores open at least a year grew 3.9 percent in the third quarter. This is a key measure of a retailer's health because it excludes stores that opened or closed during the year.

For the full year, the company now expects earnings of $1.05 to $1.15 per share, down from its earlier outlook of $1.26 to $1.41 per share.

It expects revenue to grow by 22 to 24 percent, compared with its previous guidance of a 20 percent to 25 percent increase.

Analysts are expecting earnings of $1.34 per share on revenue of $2.5 billion for the year ending in March.

HHGregg plans to officially report its full quarterly financial results on Feb. 8.

The company's stock was down $2.05, or 15.6 percent, to $11.08 per share just before closing on Tuesday.

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