Appliance and consumer electronics retailer HH Gregg, reported second quarter result on Friday that weren't as bad as expected.
Sales declined 5% to $587 million as a 8.8% sames store sale decline more than offest additional volume resulting from the addition of 19 new stores during the prior 12 months. Profits declined to $3.8 million or 11 cents a share from a profit of $6 million or 16 cents a share the prior year. Despite the drop, the company's shares surged nearly 20% at one point on Friday as analysts had expected earnings per share of only 9 cents. The company also reported improved gross margins and affirmed its full year gudiance for earnings in the range of 90 cents to $1.05.
"While the video category remained challenging across the industry in our second fiscal quarter, we were pleased with the early progress of strategic initiatives designed to enhance store productivity. While we improved our video sales mix to focus on larger screen televisions which improved our gross margin rate, we were disappointed by the amount of overall market share of televisions we lost," said president and CEO Dennis May. "Over the next few quarters we will continue to refine our strategy to find the right mix between gross margin rate and market share. We continue to see positive results in our appliance business and are continuing to test new merchandise and tailor our assortment around products that leverage our consultative sales force, delivery and installation network and private-label credit offering."
The company is moving forward with changes to its merchandise mix that will involve the roll out of furniture and exercise equipment to all stores during the company's third quater, a move that could prove beneficial as the exercise equipment category expereinces peak sales during December and January. In addition, a select number of stores will receive an expanded offering of tablet and hand held consumer products.
Elaborating on the comp decline, the company said it was driven primarily by a decrease in net sales in the video and "other" categories, partially offset by increases in net sales in the appliance and computing and mobile phones categories. The video category comparable store sales decline was driven by a double digit decrease in unit demand partially offset by a single digit increase in average selling prices. The decrease in comparable store sales for the "other" categor