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HHGregg shares plummet on warning of weak sales quarter

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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.

 

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  • Anyone?
    I can't remember the last time I even saw a HHG ad, and the one's I remember, had only appliances. The wife and I walked into a HHG store recently and it was more staff than customers. Staff was bored. I don't see this chain lasting another two years, can you say Circuit City? and they were a better store.
  • Hoosier Marketing Genius
    Somebody needs to splain to HH Gregg that they are living on borrowed time unless they get some marketing talent and rebrand in a manner that gets people excited. I've watched this company for 3 years since moving back to Indy and it's as if they don't have a clue. Guys, Amazon? Ever hear of them? They're eating your lunch. BestBuy out markets you big time. You're in serious trouble, and it has nothing to do with the weather. Wake up or close down. Either is preferable to watching you pretend that you understand consumers because, really guys, you don't have a clue. Admitting it is the first step to recovery.
  • Agreed
    I agree with AP. Weather is one thing, but Gregg practically gives away TVs around the time of the Superbowl. The problem is that when you go into the stores, it's a half an hour before anyone asks if they can help you. They need a mystery shopping company to help them figure that out.
  • oh come on!
    Totally agree with AP. Been in Greggs 3x's in the last year. Sears and Clarks were giddy when I went waltzed right into their establishment and even price matched after no sales staff at Greggs would wait on me. And don't blame the weather or a busy weekend, I shop during the week.
  • Blaming the weather?
    Blaming something beyond your control evidences a lack of control. If you truly believe that cold weather is to blame for a drop in in-store sales, then why did these sales not take place over the Internet? Do you really think middle-aged women (HHgregg's typical customer) didn't go shopping for 3 months because of snow? HHgregg's sales are declining because of a poor product mix and lackluster store experience.

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