) first quarter ended June 30, 2012 adjusted loss of 16 cents per
share was in line with the Zacks Consensus Estimate. However, the
loss incurred in the first quarter of 2013, was decently wider than
prior-year quarter's loss of 2 cents per share. Decline in
comparable store sales, gross margin contraction and higher
selling, general and administrative expenses incurred during the
period were responsible for the wider loss.
Quarter in Detail
Hhgregg's net sales rose 13.5% to $489.9 million in the reported
quarter, driven by 30 new store openings during the calendar year,
partially offset by a decline in comparable store sales. However,
sales fell shy of the Zacks Consensus Estimate of $490 million.
Same store sales witnessed a 5.1% decline in the quarter
compared to previous year due to poor performance of the video and
other categories. The company reports its business under three
the company offers premium video products, branded appliances,
audio products and accessories in its stores. Net sales in the
Video category climbed 33% year over year while comparable store
sales in the segment went down by 16.7% due to low demand during
, it offers a broad selection of major appliances, including the
latest generation refrigerators, cooking ranges, dishwashers,
freezers, washers and dryers, sold under a variety of leading brand
names. Appliance category witnessed a sales growth of 49% and same
store sales growth of 6.3%.
Computing and mobile phones,
the company offers a broad selection of computer and mobile phone
products, including notebook computers, tablets and mobile phones.
Computing and mobile phones reported a sales growth of 8% with a
same store sales growth of 8.7%.
Apart from the mentioned products, the company also sells
products like audio systems, furniture, mattresses and other select
popular consumer electronics and accessories. These products
reported sales growth of 10%, while same store sales declined 19.7%
due to low sales of cameras, camcorders and small electronics.
Gross margin, shrank 30 basis points to 29.9% in the quarter.
The decline was caused by poor performance in the video and
appliance category due to increased promotional expenses in the
SG&A, as a percentage of net sales, improved approximately
32 basis points (bps) in the quarter to 24.3%. Net advertising
expense based on net sales climbed 90 bps to 5.6% in the reported
quarter, driven by increased promotional expenditures to drive
Other Financial Details
Hhgregg repurchased 1.1 million shares during the reported
quarter for a total cost of $11.2 million. The share buyback was
part of the $50 million share repurchase program that commenced on
May 24, 2012. As of June 30, 2012, the company had $38.8
million worth of shares outstanding under the current share
Concurrent with the earnings release, management updated its
outlook for fiscal 2013. For fiscal 2013, the company lowered its
earnings guidance to a range of 90 cents to $1.05 from previously
announced band of $1.12 to $1.27.
Net sales for fiscal 2013 are expected to increase in the 3%-6%
range compared to previously announced range of $1.12 to $1.27,
while comparable store sales are expected to be in the range of
negative 6% to negative 4%. Hhgregg also expects to open 20 to 22
new stores in fiscal 2013.
The company plans to launch several new products to improve its
store productivity. In the second quarter of fiscal 2013, the
company plans to improve its online business by launching the 'buy
online, ship from store' program. The company also plans to add
additional Apple products in its stores in an effort to boost sales
in the coming quarters.
Hhgregg operates as a specialty retailer of consumer
electronics, home appliances, and related services, and
primarily competes with
Best Buy Co. Inc.
). Hhgregg currently has a Zacks #5 Rank (short-term Strong Sell
rating) on the stock.
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HHGREGG INC (HGG): Free Stock Analysis Report
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