Hhgregg lowers guidance on lackluster video sales

Indianapolis — In light of poor performance in its video category, electronics retailer Hhgregg has lowered its fiscal 2013 guidance.

Hhgregg is expecting net sales for its first quarter to be approximately $490 million, an increase of approximately 13.5% as compared with the $431.5 million of net sales reported in the fiscal first quarter last year. The company attributes the sales growth to the net addition of 30 new stores during the quarter.

The company expects its first quarter loss to widen to a range of $6.2 million to $5.7 million, or 17 cents to 16 cents per diluted share, from a net loss of $0.8 million, or 2 cents per diluted share.

Because of lower-than-expected revenues within the video category and greater expenses, Hhgregg expects same-store sales to be down 5.1%. This includes a 16.7% decline in the video category.

Dennis May, president and CEO commented, "Our sales results for the quarter are an indicator of the difficulty in the current retail environment, and more specifically the embedded volatility in the video industry. While we remain disappointed in our video results, we continue to make progress on our key initiatives of gaining market share in the appliances category, making strides toward stabilizing gross margin rates, and dynamically growing our e-commerce business. We remain committed to our model of competing on price and differentiating ourselves through service on big box consumer products. While big box consumer products today are defined as appliances and large screen televisions, we continue our plans to test new products that will help fill the void from sales declines in the video category. We continue to look for products that complement our consultative sales force, leverage our delivery and installation network, and utilize our private label consumer credit card."

In light of the preliminary fiscal first quarter sales results, Hhgregg now anticipates that annual net income per diluted share will be 90 cents to $1.05 in fiscal 2013. This compares with previous guidance of net income per diluted share of $1.12 to $1.27. Fiscal 2013 comparable-store sales are expected to be down 6% to down 4%, compared with previous guidance of negative 1% to positive 1%. Total sales for the year are now expected to increase 3% to 6%, as compared with a previous guidance of net sales increase of 9% to 12%.

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