hhgregg Loss Grows in Second Quarter

Sales fall, especially in consumer electronics
November 8, 2016David Gill

hhgreggstorefront3x2INDIANAPOLIS-With sales on a slide, hhgregg posted a net loss of $18.4 million in its fiscal second quarter, compared to a net loss of $10.1 million in the second quarter of last year.

Net sales fell 6.6 percent to $454.5 million, including a decrease of 6.4 percent in same-store sales. Much of the drop in sales occurred in the consumer electronics category, whose same-store sales plummeted by 25.1 percent.

Same-store sales for appliances (whose share of hhgregg’s second-quarter sales rose from 56 percent to 63 percent) rose 5.7 percent, while same-store sales of home products (which include furniture and mattresses) were down 0.7 percent. Online sales rose 35.5 percent.

Also affecting the bottom line, selling, general and administrative expenses rose 3.7 percent in dollars and 257 basis points as a percentage of sales, to 25.9 percent. Gross margin was up 21 basis points to 28.7 percent. The company also reported a $1.4 million noncash charge for asset impairment, due to an evaluation of stores for which sales and profits had declined, which also hurt the overall bottom line.

While the red ink grew deeper in the quarter, Bob Riesbeck, hhgregg’s CEO, looked up on it as a period of further progress. “In the second fiscal quarter we continued to implement our strategic plan and to position hhgregg as the best option to purchase appliances, furniture and premium consumer electronics,” Riesbeck said. “Our focus on the customer experience continues to reflect positively as we again saw increases in customer satisfaction scores. We are energized by the upcoming holiday season as we look to maintain our steady progress.”

David GillDavid Gill | Senior Editor
dgill@hfnmag.com

David Gill covers home textiles, small electrics housewares, personal-care products, cleaning products, mattresses, consumer electronics and major appliances. He also reports on retailers and writes about the business and financial side of both vendors and retailers. He has more than 30 years of experience in business journalism, and has worked for other publications and websites that cover consumer products from both the manufacturer and retailer sides. His outside interests include sports (he is a big fan of the New York teams and of British soccer), cooking, movies and theater. He occasionally enjoys a good cigar as well.

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