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HHGregg shares surge on strong quarterly profit

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HHGregg Inc.’s stock price shot up nearly 20 percent late Wednesday morning after the Indianapolis-based appliance and electronics retailer reported strong earnings.

Wall Street responded to the company’s higher profit in its fiscal second quarter by sending shares up $2.35, to $14.48.

HHGregg earned $6 million, or 16 cents per share, in the three-month period ended Sept. 30. That compared with a profit of $3.9 million, or 10 cents per share, in the same quarter a year ago.

Analysts had expected profit of 6 cents per share.

Quarterly revenue climbed 28.6 percent, to $618.6 million.

HHGregg attributed the rise in profit to an increase in revenue from the addition of 35 stores within the past year as well as a 1.5-percent increase in same-store sales.

The company had reported four straight quarters of declining same-store sales, so the increase was welcome news.

“At the beginning of the year, we laid out our strategic initiatives for fiscal 2012, which included growing appliance market share, launching a new e-commerce site, expanding our assortment in the home office category, launching a new advertising campaign, extending our market share in the video category and ultimately restoring the company to positive comparable store sales,” CEO Dennis May said Wednesday morning in a conference call with investors.

“As we sit here today we are pleased with our execution on these initiatives and with our performance during the fiscal second quarter.”

In stores open at least a year, video sales dipped 4 percent, but home office and appliance sales increased 23.9 percent and 7 percent, respectively. Increased demand for notebook computers and tablets bolstered home office sales.

“I am very pleased to report that our comparable store sales increased 7 percent in the appliance category,” May said. “This significantly outpaced the industry, which was reported down in low single digits.”

Indeed, lower-than-expected demand from skittish U.S. consumers hurt third-quarter results for the world's two biggest makers of home appliances, Whirlpool Corp. and Electrolux AB, according to The Wall Street Journal.

Whirlpool, the world's largest appliance maker, based in Benton Harbor, Mich., reported a 9.2-percent fall in third-quarter earnings. No. 2 Electrolux, based in Sweden, posted a 15-percent drop.

HHGregg rebounded from a poor performance in the previous quarter, when disappointing sales at stores open at least a year dragged the company to just its second quarterly loss since going public in 2007. In the previous quarter, HHGregg lost $800,000, or 2 cents per share, as revenue dipped 1 percent, to $431.5 million.

HHGregg expects to open between 20 and 25 new stores in fiscal 2013, primarily in markets surrounding a regional distribution center it opened in the Chicago area earlier this year. New stores are expected to open in St. Louis, Milwaukee and in other locations in Illinois.

Looking toward the holiday shopping season, May expects same-store sales to increase between 3 percent and 7 percent.

The company operated 204 stores as of Sept. 30, up from 169 during the same period in 2010.

HHGregg adjusted its fiscal 2012 earnings-per-share guidance to a range of $1.26 to $1.41 from the previously expected $1.20 to $1.35 per share to account for share repurchases. Since May, the company has repurchased 2.7 million shares of its common stock at a total cost of $35 million.

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  • Good for HHGregg
    It's nice to see a local company doing well in such a competitive, cut-throat segment. I find the sales people at the 96th street store extremely knowledgeable and helpful. They have great sales with leading brands.
  • Why I will not buy at HH Gregg
    Twice I went thee to buy something. Neither time did the salesman know enough about the product to give information on it. One time, I asked for info and he said he did not know that much about how it worked and they did not have an instruction book handy. ''Once I buy the boxed product and take it home, I will find instructions inside the box and I can read them then''.

    Of course, I went elsewhere to buy.

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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