Hhgregg shares tumble on weak fiscal 4Q revenue

Hhgregg shares fall after 4th-qtr net income beats predictions, but revenue falls short

Associated Press

NEW YORK (AP) -- Hhgregg Inc.'s shares tumbled Tuesday after the electronics and appliance retailer reported a slightly better-than-expected fiscal fourth-quarter profit, but its revenue fell well short of Wall Street predictions.

THE SPARK: Hhgregg said late Monday that it earned $9.9 million, or 31 cents per share. Analysts polled by FactSet expected earnings of 29 cents per share. Revenue fell 3 percent to $597.6 million, while analysts expected $620 million.

The company also issued lower-than-expected revenue guidance for the current year.

THE BIG PICTURE: The Indianapolis-based company said its revenue at stores open at least a year decreased 9.8 percent. The metric is a key measure of a retailer's health, because it excludes revenue from stores that recently opened or closed.

President and CEO Dennis May said the company's sales improved sequentially through each month of the quarter, with March's results significantly better than those of January. He added that the positive trends are continuing in the fiscal first quarter, with revenue at stores open at least a year increasing by the "low single digits."

For the current fiscal year, the company said it expects to post a profit of 75 cents to 90 cents per share on revenue growth of between 1 percent and 3.5 percent. Based on last year's revenue, the guidance implies revenue of between $2.5 billion and $2.56 billion.

Analysts expected a profit of 79 cents per share on $2.59 billion in revenue.

THE ANALYSIS: Jefferies analyst Daniel Binder backed his "Hold" rating for the company's stock, but boosted his price target by $6 to $14. He said that while the fourth-quarter sales weren't that great, sales appear to be on the rise in the first quarter.

Unlike in past years when the company has had to cut its outlook as the year progresses, Binder said he has more confidence this time that the company will be able to meet its targets for this fiscal year.

THE SHARES: Down $1.84, or 11.8 percent, to $13.77 in afternoon trading, after dipping as low as $13.50 earlier in the day. Over the past 52 weeks, the company's shares have traded between $5.84 and $15.95.

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