(By Balaseshan) Electronics retailer Hhgregg Inc. (NYSE: HGG) has cut its fiscal 2013 outlook and guided third quarter below Street's view, citing continued headwinds in the video industry. Following the news, shares fell 6.08% in premarket.
The company said fundamental shifts across the video category continued to pressure its business during the third quarter. The overall store traffic and video category sales were negatively impacted by the declining industry demand for flat screen televisions along with broadened distribution of large-screen televisions.
For the third quarter, the company expects adjusted earnings of about $0.52 per share and net sales of about $799.6 million, while Street predicts profit of $0.59 per share on revenue of $845.32 million.
Third quarter comparable store sales are estimated to have decreased about 9.7%, with the video category expected to have declined about 24.6%.
For the fourth fiscal quarter, Hhgregg expects to continue to drive comparable store sales increases and market share gains in the appliance and computing and mobile phone categories. However, the company anticipates that the industry wide declines in the video category will continue.
"We also expect our sales mix to have a negative impact on our gross margin rate in the fourth fiscal quarter compared to the prior year," said CFO Jeremy Aguilar. "These factors along with our third fiscal quarter results are expected to negatively affect fiscal 2013 earnings, as reflected in our revised guidance."
For fiscal 2013, the company lowered its earnings per share (EPS) guidance in the range of $0.70 to $0.80 from previous forecast of $0.90 to $1.05. HGG also cut its sales growth outlook to range of flat to 1.0% from previous growth estimate of 3.0% to 6.0%. Street analysts predict EPS of $0.93 on revenue growth of 3.40%.
Hhgregg reduced its fiscal 2013 comparable store sales of negative 8.5% to negative 7.5% from previous guidance of negative 6.0% to negative 4.0%.
HGG closed Friday's regular session at $7.89. The stock has been trading between $5.84 and $13.12 for the past 52 weeks.