HH Gregg saw a significant improvement in its financial results for the three-month period ended June 30. Despite a net loss of $1.3 million, or $0.04 per diluted share, the specialty retailer narrowed the gap from a net loss of $5.7 million, or $0.16 per diluted share, for the comparable prior-year period.
The decrease in net loss for the three month period ended June 30, 2013 was due, in part, to a comparable-store sales increase of 0.8%, offset by a decrease in gross profit as a percentage of net sales.
The 0.8% increase in comparable-store sales for period was driven primarily by the appliances, computing and wireless and home products categories, partially offset by a decline in the consumer electronics category. The appliance category increase in comparable store sales was driven by an increase in both the average selling price and units sold. The growth in the computing and wireless category was led by increased demand for tablets, partially offset by a decline in mobile phones and notebook computers. The increase in comparable store sales for the home products category was primarily a result of a double digit comparable store sales increase in mattresses, in addition to sales from the introduction of furniture and fitness equipment categories. The consumer electronics category comparable store sales decline was driven primarily by a double digit comparable store sales decrease in televisions, largely resulting from our strategy of offering fewer entry level models.
The company’s gross profit margin decreased for the period from 29.9% for the comparable prior year period. The decrease was largely due to decreases in gross profit margin rates in the consumer electronics and computing and wireless categories, partially offset by a slight increase in gross profit margin rate in the appliance category.
“We are pleased with the early results and consumer feedback on the new product assortments that we have introduced and will continue to expand and refine these category additions throughout the coming year,” said Dennis May, president and CEO. “We remain committed to improving productivity levels across our existing store base and are pleased with the early progress on our strategic initiatives to not only reshape our sales mix, but also to expand our customer base and enhance our service offerings. The quarter's results significantly outperformed our prior year earnings comparison, due to our positive comparable store sales and lapping the cost cutting measures put in place during the second quarter of the prior fiscal year, and are in-line with our expectations.”
Net sales for the period increased 7.2% to $524.9 million, from $489.9 million in the comparable prior-year period. The increase in net sales for the three month period was the result of the company’s increase in comparable-store sales as well as the net addition of 18 stores during the past 12 months.
“During the quarter, we continued to build on our strong balance sheet and liquidity position by generating year-over-year positive cash flow gains while continuing to execute on our share repurchase plan,” said CFO Jeremy Aguilar. “Additionally, we have further strengthened our capital position and liquidity through the newly executed amendment to our credit facility. This new amendment allows us to benefit from an advantageous debt market by lowering our interest rate, increasing the size of our facility from $300 million to $400 million, and extending the term for five years. We believe we are appropriately capitalized and well positioned to execute on our core initiatives and long-term growth strategies.”
HH Gregg is a specialty retailer of home appliances, televisions, computers, consumer electronics, home entertainment furniture, mattresses, fitness equipment and related services operating under the name HH Gregg. HH Gregg currently operates 228 stores in Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia and Wisconsin.