Hhgregg Inc. shares plunged Thursday after the electronics and appliance retailer's fiscal second quarter came in below market expectations.
THE SPARK: The company reported early in the day that it earned $3.7 million, or 12 cents per share, for the quarter that ended Sept. 30. That is compared with net income of $3.8 million, or 11 cents per share last year. Its revenue slipped to $568.3 million from $587.6 million.
Analysts polled by FactSet were anticipating earnings of 13 cents per share on revenue of $612 million from the Indianapolis-based retailer.
THE BIG PICTURE: Hhgregg said that revenue from its stores open at least a year fell 6.2 percent. This is considered a key indicator of a retailer's financial performance as it strips away the impact of recently opened or closed stores. The company's costs did decrease slightly and its appliance sales improved, but it wasn't enough to offset slow sales in the consumer electronics business.
Consumers remain selective about where and how they are spending money amid a slow economic recovery.
The company reiterated a full-year forecast of 75 to 90 cents per share; analysts had forecast 74 cents per share.
THE ANALYSIS: Janney Capital Markets analyst David Strasser said that the big sales miss drove the weak earnings. Based on industry sources and sales results, he had anticipated improved revenue from the company's established stores for the period. But he noted that the company had better gross margins and lower expenses for the quarter. He reiterated a "Neutral" rating on the company's stock.
SHARE ACTION: Shares fell $1.85, or 10.4 percent, to $15.90 by late afternoon amid a modest market uptick. Its shares have more than doubled this year.
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