Hhgregg Fiscal Q4 Sales Declines Drive Category Changes

As it readies changes to its product mix, hhgregg, Inc. has announced preliminary sales and earnings results for the fourth fiscal quarter, ended March 31, 2014. For fiscal Q4, the company estimated net sales to be approximately $538.3 million, a decrease of approximately 9.9%, as compared to net sales of $597.6 million reported for the fourth fiscal quarter of 2013. Fourth fiscal quarter comparable store sales are estimated to have decreased approximately 9.9%, with the home products category expected to have decreased approximately 0.4%.

“We faced a number of headwinds during the quarter, which led to disappointing financial results. Extreme weather in January, February and the beginning of March negatively impacted traffic and operating performance in the majority of our stores, particularly those located in the Midwest and Mid-Atlantic regions, where the weather was the most severe,” Dennis May, president and CEO, commented. “While we are disappointed in our preliminary results, we remain focused on executing our strategic initiatives to transform the business by refining our merchandise assortment, improving our customer shopping experience, expanding our credit offerings and enhancing our service capabilities.”

According to hhgregg, the retailer is exiting the contract-based mobile phone business and adding to its home appliance and furniture segments in an effort bolster sales in those stronger-performing categories.

“As we look forward, we continue to be pleased with the progress we have made in the appliance category,” May said. “This quarter marks our 11th consecutive quarter of comparable store increases in appliances. We also believe that our strategic decision to transition from one furniture brand to five brands will strengthen our assortment of merchandise in the home products category, providing our customers with an enhanced shopping experience. We expect to have these new products in our stores by early summer.”

Net loss per diluted share for the fourth fiscal quarter is expected to be $0.25. The net loss includes approximately $4.0 million of pre-tax expenses related to the expected write down of inventory for the planned exit from the contract-based mobile phone business and for the write-off of store fixtures associated with the company’s changing product mix. Excluding these non-recurring expenses, adjusted net loss per diluted share is expected to be $0.17 for the fourth fiscal quarter of 2014 compared to the prior year’s fourth quarter adjusted net income per diluted share of $0.31.