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HHGregg reports smaller profit in fiscal third quarter

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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.
 

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