Profits down, expansion outlook up at HH Gregg

Regional electronics chain HH Gregg indicated its full-year profit forecast could be in jeopardy following the release of second-quarter results and a 20% decline in profits.

Total sales at the company increased 44.8% to $480.9 million during the three-month period ended Sept. 30, however that increase was largely driven by the addition of 51 new stores during the past 12 months as comp-store sales decreased 1.5%. The company currently operates 169 units and is on track to open a total of 43 units this year.

 

The comp decline was driven by waning demand for appliances as a 3.9% decline in that category was partially offset by a 1.6% gain in the video category.

Profits declined 20.4% to $3.9 million and earnings per share decreased 23.1% to 10 cents, which prompted the company lower the bottom of its full-year guidance range by a nickel. Per share profits are now forecast in a range of $1.30 to $1.45 from $1.35 to $1.45.

“We were very pleased with our continued market share gains in both new and existing markets. Additionally, we have been pleased with our new store productivity which continues to run above 100%,” said Dennis May, HH Gregg president and CEO. “However, we continue to face a challenging macro-economic environment, which is negatively impacting our industry and continues to add volatility to our business. We entered the quarter on a strong note, with consumers responding very favorab