UPDATE 2-Hhgregg Q2 tops market estimates, shares jump

* Q2 EPS $0.13 vs est $0.07

* Q2 rev $332.2 mln vs est $324.5 mln * Sees FY2010 EPS $0.90-$1.00

* Shares up 7 pct (Recasts; Adds conference call details, analysts comments, updates share movement)

Viraj Nair

BANGALORE, Nov 5 (Reuters) - Hhgregg Inc (HGG.N), a regional electronics and appliance retailer, reported quarterly results that easily beat expectations, aided by improving sales trends, sending its shares up 7 percent.

"The sales trends were better, particularly in the appliance category... and the gross margin rates, which were flat year-over-year, was better than what we were expecting," Piper Jaffray & Co analyst Mitchell Kaiser said by phone.

Hhgregg is optimistic about appliances, which contributed 42 percent in sales in the quarter and has gained market share, a company executive said on a conference call with analysts.

Sales at stores open at least a year fell 7.5 percent for appliances, while overall same-store sales fell 9.4 percent.

In the television category, which also contributed 42 percent to second-quarter sales, comparable sales fell a steeper 15.9 percent, hurt by lower average selling prices and customers buying cheaper models.

Last year, with Circuit City going out of business and the global economy melting, there was a big oversupply situation for televisions, causing prices to plummet. However, since then fabrication plants in Asia have cut back on the supply, analyst Kaiser said.

"Price declines are not going to be as dramatic as they were last year," he added.

The television sector is looking brighter as easier comparisons are coming up and LED technology enters the market, a company executive said.

However, the company sees gross margin pressure in the third quarter, as it overlaps a spike in margins last year from the bankruptcy of Circuit City and excess of inventory in the market.

"Last year they took advantage of a few opportunistic buys, their gross margins were up 90 basis points. They don't expect that opportunity to be replicated this year," analyst Kaiser said.

The company, which competes with larger rivals Best Buy Co Inc (BBY.N) and Sears Holdings Corp (SHLD.O), also raised the lower end of its fiscal 2010 earnings outlook by 5 cents to 90 cents a share.

Hhgregg now sees a fiscal 2010 profit of 90 cents to $1.00 a share, including dilution from a stock offering completed during the second quarter, and charges of 5 cents to 7 cents per share in the fourth quarter.