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Weak sales lead HHGregg to post smaller profit

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Weak sales at HHGregg Inc. stores over the holidays led the Indianapolis-based retailer to report a 71-percent drop in profit for its latest quarter.

For its fiscal third quarter ended Dec. 31, HHGregg said Thursday morning that same-stores sales fell 11.2 percent on lower-than-expected demand for its computers and wireless products.

The seller of appliances and electronics reported profit of $5 million, or 17 cents per share, compared with $17.4 million, or 51 cents per share, in its previous third quarter.

HHGregg CEO Dennis May attributed the disappointing sales to a company decision to avoid offering steep discounts on certain electronics products.

“The broadening distribution and heightened promotional nature of the consumer electronics category during the holiday period reinforces our strategic decision to continue transforming our business toward a broader assortment of home products, including appliances and home furnishings,” May said in a prepared statement.

Appliances accounted for 41 percent of HHGregg’s sales in its latest quarter, up from 35 percent during the same quarter in 2012. Consumer electronics accounted for 43 percent of sales last quarter, down from 48 percent in the year-ago period.

Third-quarter revenue decreased 11.6 percent, to $707.1 million.

For the fiscal nine months ended Dec. 31, HHGregg reported profit of $7.5 million, or 24 cents per share, compared with $15.4 million, or 44 cents per share, for the same period the previous year..

Revenue during the same period dipped 4.1 percent, to $1.8 billion.

HHGregg adjusted its guidance for fiscal 2014 and now expects same-store sales for the year to decline between 5.5 percent and 7 percent, from a previously anticipated 2 percent to 3.5 percent.

Revenue is expected to fall between 4 percent and 5.5 percent. HHGregg previously anticipated revenue to range from flat to a drop of 1.5 percent.

HHGregg shares had declined 18 percent on Thursday by early-afternoon trading, to $8.67 per share.
 

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  • Too Big Too Fast
    HHGregg suffers from the "me too" disease. They should have stuck with their roundhouse, which is selling white goods. They can't even start to compete with online sales of electronics and/or Target or Walmart, they don't have the buying power and can't hold the Mfgrs feet to the fire to get a better wholesale price. They've been around a long time and probably think that's what's going to get them through. But it's not. They'd be smart to start cutting back, closing outbound stores and cutting staff. They have WAY too many salespeople, the last time I was in there, at least 4 guys came at me like vultures. That's too much salesface for me to handle.
  • response to casual
    I agree they need better marketing because I had no idea they sold exercise equipment. But it is going to take some time for people to stop only thinking about HH Gregg as a place for appliances and electronics. Their biggest problem is the margins that used to be there in big screen TVs is not longer there.
  • How about better Marketing?
    I think HH Gregg is smart to diversify into exercise equipment and furniture, since their strength is their supply chain and delivery network (should add things like patio furniture and pool tables too). But what I don't get is why they haven't marketed it better? If I didn't read the IBJ and occasionally scan their Sunday ads, I wouldn't know they sell those new product lines. Most people in Indy, where HH Gregg is headquartered, probably still don't know it. When I look at the Sunday ad, the new products are typically just one or two pictures out of hundreds in the ad, and typically towards the back. Exercise equipment wasn't even prominent around New Years, when every retailer hypes it. Their Sunday ad in general always seems very lackluster (Target's rocks btw). Or maybe create stores within the store, with separate branding. There is a chain called Furniture Row that looks like several stores from the outside, but is all one store on the inside. My 2 cents.

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