Hhgregg 2Q profit falls, stock rises on beat

INDIANAPOLIS -- Hhgregg Inc.'s fiscal second quarter net income plunged 38 percent, as slumping video demand drove down revenue from established stores, but the electronics and appliance retailer beat earnings expectations and its stock soared.

The Indianapolis company said Friday that it earned $3.8 million, or 11 cents per share, in the three months that ended Sept. 30. That compares to net income of $6 million, or 16 cents per share, in last year's quarter.

Revenue fell 5 percent to $587.6 million.

Analysts, on average, expected 9 cents per share on $637.1 million in revenue, according to FactSet.

The company's shares jumped 17.1 percent, or $1.09, to $7.48 in morning trading. The stock has ranged from $5.84 to $16.65 in the last 52 weeks.

Caris & Co. analyst Scott Tilghman noted that even though Hhgregg missed revenue expectations, analysts liked the company beating earnings forecasts and reaffirming its 2012 outlook.

"In this environment, I think that alone makes people happy," he said.

Tilghman also said analysts like the company's shift from adding stores to improving profitability.

Hhgregg said sales from stores open at least 14 months fell nearly 9 percent due to a drop in demand for televisions, DVD and Blu-ray players.

CEO Dennis May said in a statement that the video category remains challenging across the industry. He added that the company focused more on larger screen televisions, which improved profitability, but the company lost television market share nonetheless.

Hhgregg still expects earnings within a range of 90 cents to $1.05 per share for fiscal 2013.

Analysts expect, on average, 92 cents per share.

Hhgregg runs 224 stores in 19 states; including Indiana, Illinois, Maryland, New Jersey, Ohio and Pennsylvania.