CEO and President Dennis May said that the company struggled with shifting dynamics in the television market. There is less demand for flat-screen televisions and broader distribution of large-screen televisions, which led to fewer customers coming through its doors to shop.
The company has dialed back heavy discounts on low-end televisions in order to improve its margins. And May said the company is testing new product categories and financing options for customers so it can improve its performance in this category.
Hhgregg did see improved sales in its appliance, computing and mobile phone business but it wasn't enough to save the quarter.
The Indianapolis company said that based on preliminary information, it expects net income of $17.4 million, or 51 cents per share, for the third quarter period ended Dec. 31. That's down from $22.5 million, or 60 cents per share, earned in its third quarter of the prior year.
After adjusting for impairment charges, it expects to have earned 52 cents per share in the most recent period.
Hhgregg estimates its third-quarter revenue fell nearly 4 percent to $799.6 million from $829.5 million.
Analysts polled by FactSet were expecting earnings of 55 cents per share on revenue of $823.4 million.
The company said its revenue from stores open at least a year decreased 9.7 percent. This is considered a key indicator of financial performance as it strips away the impact of recently opened and closed stores. This measure fell 24.6 percent in its video category but increased 6.1 percent for its appliances and 16.2 percent for its computing and mobile phone categories.
As a result of the weak third quarter, the company lowered its full-year forecast.
Hhgregg expects to earn 70 cents to 80 cents per share for the year, down from its prior forecast of earnings between 90 cents and $1.05 per share. The company expects its revenue will be flat or up 1 percent, versus its prior forecast of a 3 to 6 percent increase. Based on its current guidance, its annual revenue would come in between $2.49 billion and $2.52 billion.
Analysts had forecast earnings of 84 cents per share on revenue of $2.53 billion.
The company will report its full third-quarter results on Jan. 31 and provide more detail at that time.
Shares fell 43 cents, or 5.4 percent, to $7.46 in afternoon trading. Its shares fell sharply in July when it reported its fiscal first-quarter results and have not yet recovered. Its stock remains at the low-end of its 52-week trading range of $5.84 to $13.12.