(RTTNews) - Home appliances and consumer electronics retailer hhgregg Inc. (HGG: News ) said Thursday its second quarter profit increased from last year, helped by a modest increase in sales, a flat gross margin, and a modest decrease in operating expenses. However, quarterly comparable store sales decreased by 9.4%, reflecting continued weakness in consumer demand in the both the video and appliance categories. Looking ahead, the company tightened its earnings outlook for fiscal year 2010.

The company posted net income of $4.9 million or $0.13 per share for the second quarter, up from $3.4 million or $0.10 per share in the prior year quarter. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.07 per share for the second quarter. Analysts' estimates typically exclude special items.

Second quarter net sales increased 3.7% to $332.18 million from $320.30 million in the same quarter last year, due to the net addition of 15 stores during the past 12 months, partially offset by lower comparable store sales. Twelve analysts had a consensus revenue estimate of $324.49 million for the second quarter.

hhgregg said that comparable store sales for the quarter decreased 9.4%, compared to an 8.8% drop a year ago, hurt by continued weakness in consumer demand in the both the video and appliance categories.

As a percentage of sales, gross profit margin remained flat at 30.8%.

For the first half of 2009, hhgregg's net income was $6.4 million or $0.18 per share, compared to $5.5 million or $0.17 per share in the previous year period.
Net sales for the period rose to $616.57 million from $615.72 million in the prior year period.

For fiscal year 2010, the company now expects earnings of $0.90 to $1.00 per share, and net sales growth of 6% to 9% based on a comparable store sales decline of 6% to 9%. The Street estimates earnings of $0.96 per share on revenue of $1.47 billion for the year.

Earlier, the company estimated earnings of $0.85 to $1.00 per share, and net sales growth of 3% to 7% based on a comparable store sales decline of 7% to 12%.

Jeremy Aguilar, chief financial officer of the company, said, "As we look to the back half of the year, we continue to expect sales trends to improve over the first and second quarter performance. However, gross margins will see pressure due to the lapping of the industry's inventory oversupply in the video category that we saw in the prior year."

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