Hhgregg pauses video to pursue other categories
INDIANAPOLIS — Lackluster performance in the video space ontinues to impact Hhgregg's sales and earnings results, causing the retailer to focus on more lucrative categories.
The electronics retailer reported net income of $17.4 million, or 51 cents per diluted share, for the third quarter ended Dec. 31, 2012, compared with net income of $22.5 million, or 60 cents per diluted share, for the comparable prior year period.
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 quarter decreased 3.6% to $799.6 million from $829.5 million in the comparable prior year period. According to the company, the decrease in net sales 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.
The decrease in comparable-store sales for the quarter 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 company said. 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.
Hhgregg said it expects net income per diluted share will be within a range of 70 cents to 80 cents for fiscal 2013. Comparable-store sales for the year are expected to be between negative 8.5% to negative 7.5%, and net sales are expected to be flat to up 1%.