Hhgregg Inc. Earnings: Double-Digit Revenue Growth

Rising costs hurt hhgregg Inc. (NYSE:HGG) in the third quarter as profit dropped from a year earlier. HHgregg is a specialty retailer of consumer electronics, home appliances and related services.

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hhgregg Earnings Cheat Sheet for the Third Quarter

Results: Net income for hhgregg Inc. fell to $22.5 million (60 cents per share) vs. $26.9 million (66 cents per share) a year earlier. This is a decline of 16.5% from the year earlier quarter.

Revenue: Rose 26.9% to $829.5 million from the year earlier quarter.

Actual vs. Wall St. Expectations: hhgregg Inc. fell in line with the mean analyst estimate of 60 cents per share. Analysts were expecting revenue of $825.5 million.

Quoting Management: Dennis May, President and CEO commented, “While pleased with our overall comparable store sales increase of 3.9% and market share gains during the third fiscal quarter, we were disappointed with the macro trends across the video category. However, management continues to be pleased with the traction the Company is gaining around its fiscal 2012 initiatives. In particular, our initiatives to gain market share in the appliances category and to grow our home office category sales have produced favorable results. Management believes the Company gained significant market share in both of these categories during the quarter. We are excited about the near term success these initiatives have generated, and believe these investments will continue to produce increased revenue and gross margin dollars per store.”

Key Stats:

Gross margin shrank 2.4 percentage points to 27.2%. The contraction appeared to be driven by increased costs, which rose 31.2% from the year earlier quarter while revenue rose 26.9%.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of 16 cents versus a mean estimate of net income of 6 cents per share.

The company’s revenue has now risen for two straight quarters. In the second quarter, revenue increased 28.6% to $618.6 million from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 37 cents per share, down from 44 cents ninety days ago. In the past month, the average estimate for the fiscal year has fallen from $1.35 per share to $1.10 abs.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com