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What: Shares of hhgregg (NASDAQOTH:HGGGQ) were heading south today, falling as much as 15% and finishing down 10% after providing disappointing preliminary earnings results.
So what: The electronics retailer estimated a 9.9% decline in revenue to $538.3 million for the fourth quarter, ending March 31, with a comparable sales drop of 9.9% on large declines in consumer electronics and computing and wireless categories. Because of the drop, management now expects an adjusted per-share loss of $0.25, well below analyst estimates of a $0.10 profit. The Wall Street revenue consensus had stood at $552.1 million.
Now what: CEO Dennis May said the company "faced a number of headwinds in the quarter" including extreme weather, but it managed to deliver its 11th straight comparable sales increase in appliances, which, with electronics sales flagging, has become the focus of the company's transformation strategy. Still, appliances make up just about half of the company's sales so it will need to do something about plummeting electronics sales. I'm also concerned about the company's badly missing its own guidance,and would expect shares to continue to fall unless it can reverse its sharp sales decline.