HHGregg shares slump as profit, sales weaken

Shares of HHGregg Inc. dropped 13 percent in trading Thursday morning after the Indianapolis-based electronics and appliance retailer reported a slight drop in profit and a significant lag in same-store sales.

Shares fell to $15.43, down from a 52-week high of $20.75 reached Sept. 19.

The company Thursday morning reported a profit of $3.7 million, or 12 cents per share, for the fiscal second quarter ended Sept. 30, compared with $3.8 million, or 11 cents per share, in the same period a year ago.

Revenue for the quarter dipped 3.3 percent, to $568.3 million.

The results missed expectations of analysts, who predicted HHGregg would earn 14 cents per share on $610.9 million in revenue.

Same-store revenue, which measures sales at stores open more than a year, fell 6.2 percent, largely due to a decline in sales of televisions and computers.

“Though we continue to see headwinds in our consumer electronics business, we are pleased with our ninth consecutive quarter of comparable store sales increases in the appliance category,” HHGregg CEO Dennis May said in a prepared statement. “Additionally, we are pleased with the completion of our sales floor reset and the progress made with our other initiatives aimed at the long-term success of transforming our retail strategy.”

The company continued to see a bigger percentage of its sales coming from appliances rather than electronics. Fifty percent of its sales came from appliances in the latest quarter, up from 46 percent a year ago. Roughly 36 percent of the retailer’s sales came in the consumer electronics category, down from 42 percent last year.

New products, such as entertainment furniture, fitness equipment and mattresses, in addition to the continued focus on appliances, have helped the company replace dwindling sales in other electronics.

Sales of home products in the latest quarter accounted for 5 percent of the company’s sales compared with 3 percent in the year-ago period.

HHGregg operates 228 stores in 20 states. The company said it expects to open one new store in fiscal 2014, down from a previous expectation of five stores.