Appliance and electronics retailer HHGregg Inc. on Wednesday reported a decline in fiscal third-quarter earnings due to lower-than-expected profit margins and higher spending on advertising.
For the three months ended Dec. 31, the Indianapolis-based company earned a profit of $22.5 million, or 60 cents per share, compared with $26.9 million, or 66 cents per share, in the same period in 2010.
Revenue increased 26.9 percent, to $829.5 million, thanks in part to the opening of 35 stores within the past year.
HHGregg in mid-January released a preliminary earnings report forecasting the disappointing quarter. Analysts were expecting earnings of 77 cents per share on revenue of $811.8 million.
“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,” company President and CEO Dennis May said in a prepared statement.”
Sales at stores open at least a year are a key measure of a retailer’s health because they excludes stores that opened or closed during the year.
The increase in same-store sales was driven by the major appliance and home-office segments, partially offset by a decline in video sales, which includes flat-screen televisions.
For the full fiscal year ending in March, HHGregg now expects earnings of $1.05 to $1.15 per share, down from its earlier outlook of $1.26 to $1.41.
HHGregg operates 208 stores in 16 states.
Company shares opened Wednesday morning at $10.59 each, down nearly 36 percent from as high as $16.45 in early December.