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HHGregg's profit slips despite higher revenue

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The cost of expansion took a bite out of HHGregg Inc.'s fiscal fourth-quarter earnings, which were down 28 percent from the previous year, the Indianapolis-based appliance and electronics retailer announced Thursday morning.

HHGregg had a profit of $10 million, or 25 cents per share, in the quarter ended March 31 on revenue of $417.2 million. Analysts expected earnings of 26 cents on $409 million in revenue.

Overall sales were up 14 percent from the year-ago period, but same-store sales declined 4.8 percent.

The company also issued more shares and spent $4.4 million on start-up investments in a warehouse, distribution, management training, pre-occupancy expenses and relocation. The investments are part of HHGregg's ongoing expansion into the mid-Atlantic region. The company has 131 stores, 21 of which opened in the fiscal year. It expects to add another 40 to 45 stores this fiscal year.

"We are extremely pleased with the manner in which our associates managed the business over the past 12 months," HHGregg CEO Dennis May said in a prepared statement. "Despite significant challenges in the economy and our industry, we managed to grow our sales and net income during fiscal 2010, while at the same time reinvesting in our business to strategically position the company for future growth."

The company predicted earnings of $1.35 to $1.45 per share this fiscal year. Same-store sales are expected to be flat or increase by 2 percent. Revenue is expected to increase 40 percent to 45 percent due to expansion.

Shares of HHGregg closed Wednesday at $26.62, down 6 cents from Tuesday's close.

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