hhgregg Net Falls 22.6 Percent in Q3
January 31, 2013,
INDIANAPOLIS-Declining sales and increased expenses as a percentage of sales smacked hhgregg's bottom line in the third quarter, to the tune of a 22.6 percent drop to $17.4 million.
Net sales in the quarter, which ended on Dec. 31, fell 3.6 percent to $799.6 million, which included a precipitous 9.7 decrease in same-store sales. The video category, which has suffered in recent quarters at the specialty retailer, once again hurt both the top and bottom lines, according to Dennis May, hhgregg president and CEO. May said the retailer has already begun shifting its business to larger home products, such as appliances and the recently introduced categories of furniture and home fitness, to lessen its reliance on video.
May said these products "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."
Expenses hurt net profit in spite of hhgregg's efforts at slimming them down. Selling, general and administrative expenses were down 0.9 percent in dollars but up 40 basis points as a percentage of sales, to 17.4 percent. Gross margin did pick up in the quarter, gaining 10 basis points to finish at 27.3 percent.
Based on the third-quarter numbers, hhgregg projected that net sales for the fiscal year as a whole would finish flat to up 1 percent over the prior fiscal year. In addition, same-store sales this year are now expected to decline from 7.5 percent to 8.5 percent.