Electronics retailer hhgregg, Inc (HGG) slumped 5% in early trading after the company cut its full year net income guidance. The Indianapolis-based appliance and electronics retailer reported preliminary sales results for the fiscal third quarter ended December 31, 2010 and updated fiscal 2011 guidance.
For the fiscal third quarter 2011, the company chalked up net sales of $653.7 million, an increase of approximately 30.6% compared to Q3 2009. However, fiscal third quarter comparable store sales decreased 6.2%.
The drop in same store sales was blamed on lower than anticipated sales of high-end 3D and LED TVs and “continued macro economic pressures on the appliance category.”
"While we are pleased with our overall sales and market share gains in the video category, our mix of video product was different than our expectations going into the holiday selling season,” Dennis May, president and CEO of hhgregg explained. “Industry sales from newer technologies like LED and 3D TV increased less than expected, and our mix of entry point televisions was higher than anticipated which negatively impacted our merchandise gross margin."
In response to the third quarter estimates, the company also cut its annual net income per diluted share to $1.15 to $1.23 in fiscal 2011, from previous guidance of $1.30 to $1.45.
Despite the reduced guidance, the company maintained its plan to open between 35 and 45 new stores in fiscal 2011, primarily in Chicago, Miami and Pittsburgh. The company currently operates 173 stores, concentrated along the eastern seaboard of the U.S.