Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.
What: Shares of hhgregg inc. (NYSE:HGG) were plummeting again today, falling 19% after posting a terrible third-quarter earnings report.
So what: Shares of the electronics retailer had tumbled earlier in the month on a preliminary update on its holiday quarter, but the actual results were even worse than projected. Sales fell 11.6%, to $707.1 million, much worse than estimates at $762.1 million, as same-store sales dropped in sync at 11.2%. Earnings fell from $0.51 to $0.17, also missing already-reduced expectations of $0.28. CEO Dennis May explained away the performance, saying, "Sales of consumer electronics and computing and wireless products were significantly below our expectations."
Now what: As May had pointed out previously, the many competing channels, and highly promotional sales environment, combined to send hhgregg's sales torpedoing, as the company chose not to follow the heavy-discounting strategy. Still, May was optimistic about the company's future as the retailer is focusing more on home products such as appliances and furnishings, and less on electronics. There may be growth available in those categories, but it's likely not strong enough to replace its flagging electronics sales. As this key report shows, this is a stock headed in the wrong direction, and unlikely to see a reversal anytime soon.
You need stocks for the future, not for the past
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.