Hhgregg 2Q profit rises as new stores help sales

INDIANAPOLIS (AP) — Hhgregg Inc. said Thursday its second-quarter profit jumped 46 percent as the appliance and electronics retailer opened seven new stores and spent less on advertising.

For the quarter ended Sept. 30 the company earned $4.9 million, or 13 cents per share, compared with $3.4 million, or 10 cents per share, in the year-earlier period.

Analysts polled by Thomson Reuters expected, on average, earnings per share of 7 cents.

Sales edged higher to $332.2 million from $320.3 million, better than the $324.5 million Wall Street expected.

The company said sales rose primarily from adding new stores, which offset a 9.4 percent decline in sales at stores that have been open at least one year.

Sales at stores open at least a year are a key measure of retailer performance because they measure growth at existing stores rather than from newly opened ones.

Advertising expenses fell as the company benefited from lower advertising rates. It also had higher advertising expenses in the prior-year period due to the launch of new markets in Florida. That created an easier comparison to last year's results.

For the full year, which ends in March, Hhgregg said it now expects earnings per shareof 90 cents to $1. Previously, Hhgregg expected per-share profit of 85 cents to $1.

Analysts surveyed by Thomson Reuters expect earnings of 96 cents per share.

Additionally, the company raised its guidance for fiscal 2010 sales growth to a range of 6 percent to 9 percent from an earlier range of 3 percent to 7 percent growth.

The new sales guidance implies sales for the 12 months ending in March of $1.48 billion to $1.52 billion. Sales in the fiscal 2009 year were $1.4 billion.

Analysts expect 2010 sales of $1.47 billion, according to Thomson.

The increased guidance for sales growth in the current fiscal year reflects the company's expectation that comparable store sales will decline 6 percent to 9 percent instead of declining 7 percent to 12 percent.

"We continue to expect sales trends to improve over the first and second quarter performance," CEO Jeremy Aguilar said. "However, gross margins will see pressure due to the lapping of the industry's inventory oversupply in the video category that we saw in the prior year."

Shares rose 56 cents, or 3 percent, to $18.47 in morning trading.