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Hhgregg Announces Third Fiscal Quarter Operating Results

Stocks in this article: HGG

Dennis May, President and CEO commented, “As we announced in our pre-release, the difficult industry-wide video category trends presented a challenge to our sales and earnings. With the continued growth of our appliance business and the introduction of new categories, such as furniture and home fitness, we continue to reduce our reliance on both the video category and innovation in consumer electronics. Over time, we plan to continue to refine our mix towards large consumer home products, which include a greater mix of appliances, furniture, fitness equipment and other home products that leverage our consultative sales force, ability to deliver and install big box product, and our private label credit card. Video and consumer electronics remain important to us, but we plan to increase our focus on these other large home products.”

Net sales for the three months ended December 31, 2012 decreased 3.6% to $799.6 million from $829.5 million in the comparable prior year period. The decrease in net sales for the three month period was the result of a comparable store sales decrease of 9.7%, partially offset by the net addition of 20 stores during the past 12 months. Net sales for the nine months ended December 31, 2012 decreased 0.1% to $1.877 billion from $1.880 billion in the comparable prior year period. The decrease in net sales for the nine month period was attributable to a comparable store sales decrease of 8.3%, partially offset by the net addition of 20 stores during the past 12 months.

Net sales mix and comparable store sales percentage changes by product category for the three and nine months ended December 31, 2012 and 2011 were as follows:

    Net Sales Mix Summary   Comparable Store Sales Summary

Three Months Ended December 31,


Nine Months Ended December 31,

Three Months Ended December 31,


Nine Months Ended December 31,

2012   2011 2012   2011 2012   2011 2012   2011
Appliances 35 % 30 % 42 % 36 % 6.1 % 6.8 % 4.4 % 0.9 %
Video 39 % 46 % 36 % 43 % (24.6 )% (4.8 )% (21.7 )% (8.1 )%
Computing and mobile phones (1) 14 % 11 % 11 % 9 % 16.2 % 91.4 % 13.7 % 61.1 %
Other (2) 12 % 13 % 11 % 12 % (15.2 )% (7.1 )% (16.7 )% (8.3 )%
Total 100 % 100 % 100 % 100 % (9.7 )% 3.9 % (8.3 )% (1.2 )%

(1) Primarily consists of computers, mobile phones and tablets.

(2) Primarily consists of accessories, audio, fitness equipment, furniture, mattresses and personal electronics.

The decrease in comparable store sales for the three months ended December 31, 2012 was driven primarily by a decrease in net sales in the video and other categories, partially offset by an increase in net sales 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 partially offset by a single digit increase in average selling prices, largely resulting from our strategy of offering fewer entry level models. The decrease in comparable store sales for the other category was primarily a result of double digit comparable store sales decreases in cameras, camcorders, small electronics and mattresses, partially offset by sales from the furniture and fitness equipment categories. The appliance category increase in comparable store sales was driven by an increase in both the average selling price and units sold. The growth in the computing and mobile phones category was led by increased demand for tablets, partially offset by a decline in mobile phones.

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