Shares of HHGregg Inc. plummeted Tuesday morning following the company’s announcement that it expects a sharp drop in fiscal fourth-quarter sales.
HHGregg’s stock lost as much as 11 percent of its value in morning trading, dipping to $7.70 per share, in response to the Indianapolis-based retailer’s weak preliminary sales report. Company shares were trading as high as $20 in October.
For the quarter ended March 31, HHGregg on Tuesday reported preliminary sales of $538.3 million, a 10-percent decrease from its fourth quarter a year earlier.
Sales for locations open at least a year—a key metric in retailing—also slid nearly 10 percent.
Sales in the wireless and consumer electronics categories were especially weak, dropping 22.6 percent and 18.9 percent, respectively. Sales of home appliances—a category on which Gregg has pinned hopes for growth—increased less than 1 percent.
The company attributed the disappointing sales to extreme winter weather.
“We faced a number of headwinds during the quarter, which led to disappointing financial results,” HHGregg CEO Dennis May said in a prepared statement. “Extreme weather in January, February and the beginning of March negatively impacted traffic and operating performance in the majority of our stores, particularly those in the Midwest and Mid-Atlantic regions, where the weather was the most severe.”
HHGregg has struggled with tumult in its key category of consumer electronics over the past several years. In early 2013, May conceded to analysts that sales of TVs and other video devices were headed in the worng direction, and that the store would focus more on home products like appliances, furniture and fitness equipment.
In March 2013, the company hired its third chief merchandising officer in just over a year as it struggled with its product mix. In February of this year, the firm announced that Chief Operating Officer Gregg Throgmartin had quit. He since has become the CEO of retailer BikeStreet USA.
For the entire fiscal year, HHGregg expects to report sales of $2.3 billion and earnings per share of one cent. When adjusted for expenses, the company anticipates earnings per share of 9 cents compared with 74 cents in fiscal 2013.
Analysts were expecting earnings per share of 10 cents.
The adjustments include write-offs associated with HHGregg’s plans to exit the contract mobile phone business.
HHGregg expects to announce its quarterly and yearly earnings May 20.