Low PC demand plagues Hhgregg

Sluggish traffic and weak performance in the consumer electronics segment led Hhgregg to post a 6.3% drop in same store sales in the third quarter.

The retailer reported a loss in profits from the prior year period and missed Wall Street expectations for both profit and revenue. Hhgregg posted a net loss of $86.9 million, compared to net income of $5.05 million, which was a wider loss than projected by analysts.

Dennis May, Hhgregg president and CEO, said the quarter brought more progress in the company’s efforts to change its business model and to improve on its previous sales trends. “Despite these improvements in our core categories, we are committed to increasing the rate of progress in improving the overall sales and profit trends in the business,” May said.

Non-cash charges drove Hhgregg’s move into the red. Net sales totaled $665.61 million, down 6% from $707.05 million and below Wall Street predictions. Declining net sales were primarily driven by a same-store sales drop of 6.3% which was caused primarily by decreases in consumer electronics, computers and tablets and home products.

Hhgregg has been reporting soft earnings and revenues for the past six quarters, primarily due to weak performance in the consumer electronics segment, mainly due to lack of demand in the video category and lack of innovation.

The company has also had sluggishness in same-store sales in the computing and wireless category during the same period, due to declining demand in laptops and tablets. The company’s home products category and appliance category are also showing signs of weakness.

The company said it expects that a continued focus on its strategic initiatives and change in its sales mix should result in improvement in the consumer electronics category.