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Hhgregg Announces First Fiscal Quarter Operating Results

Dennis May, President and CEO commented, “As we announced in our pre-release, our first fiscal quarter proved to be more challenging than anticipated with sales and earnings coming in below our original expectations. We reacted to the sales shortfall by making adjustments to our cost structure. We expect subsequent quarters to benefit from our cost cutting measures. We are looking at new ways to enhance our store sales productivity through the testing of new products and merchandise that leverage our consultative sales force, delivery and installation network and private label consumer credit card offering. During the Company’s 57 year history, we have been successful in adapting our business to fit the changing needs of consumers, and remain confident in our ability to navigate through this difficult cycle.”

Net sales for the three months ended June 30, 2012 increased 13.5% to $489.9 million compared to $431.5 million in the comparable prior year period. The increase in net sales for the three months ended June 30, 2012 was attributable to the net addition of 30 stores during the past 12 months partially offset by a comparable store sales decrease of 5.1%.

Net sales mix and comparable store sales percentage changes by product category for the three months ended June 30, 2012 and 2011 were as follows:

        Net Sales Mix Summary     Comparable Store Sales Summary
Three Months Ended June 30, Three Months Ended June 30,
2012   2011 2012   2011
Video 33 % 37 % (16.7) % (20.6) %
Appliances 49 % 44 % 6.3 % (12.6) %
Computing and mobile phones (1) 8 % 7 % 8.7 % 54.6 %
Other (2) 10 % 12 % (19.7) % (10.3) %
Total 100 % 100 % (5.1) % (13.2) %
_______________
   

(1)

 

Primarily consists of computers, mobile phones and tablets.

(2)

Primarily consists of audio, furniture and accessories, mattresses and personal electronics.

 

The decrease in comparable store sales for the three month period ended June 30, 2012 was driven primarily by a decrease in revenues in the video and other categories, partially offset by increases in revenues in the appliance and computing and mobile phones categories. The video category comparable store sales decline was driven by a double digit decrease in unit demand and a low single digit decrease in average selling prices. The decrease in comparable store sales for the other category was primarily a result of double digit comparable store sales decreases in cameras, camcorders and small electronics, partially offset by growth in the mattress category. The appliance category saw an increase in average selling prices, with unit demand relatively flat compared to the prior year three month period. The computing and mobile phones category was led by increased demand in the offering of tablet computers and mobile phones, partially offset by declines in notebook computers.

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