Appliance and electronics retailer Hhgregg Inc (HGG.N) cut its full-year forecast after estimating weak holiday-quarter results on declining demand for TVs and video players, sending its shares down as much as 13 percent.
Traditional brick-and-mortar stores such as Hhgregg and Best Buy Co Inc (BBY.N) have been struggling to maintain their grip in the consumer electronics market as competition from online companies intensifies.
"As weak as the consumer electronics space has been and continues to be ... it (the industry) is significantly outperforming Hhgregg's performance, suggesting that Hhgregg is increasingly becoming a share donor," Barclays' analyst Alan Rifkin wrote in a note to clients.
Today's results appear particularly weak in light of Best Buy's flat domestic comparable sales during the holiday season, Rifkin said. He has an "underweight" rating on the company's stock but a "neutral" rating on the industry.
Larger rival Best Buy reported on Friday flat same-store sales during the holiday season, offseting weak television sales with higher sales of tablets and mobile phones and improved online business.
"Fundamental shifts across the video category continued to pressure our business during our third fiscal quarter," Chief Executive Dennis May said.
Suntrust Robinson analyst David Magee said Hhgregg came into the holiday period with a focus on large screen TVs, banking on its higher margins, but lost too much in sales in doing so.
"Last year they focused too much on the small stuff and were too promotional," Magee said. "They swung too far in the other direction this year."
VIDEO SALES DECLINE
Indianapolis-based Hhgregg said it expects full-year same-store sales to decline 8.5 percent to 7.5 percent, compared with its previous forecast of a fall of 6 percent to 4 percent.
The company expects full-year sales to be flat to up 1 percent. It earlier forecast a rise of 3 to 6 percent.
Hhgregg now expects to earn 70 cents to 80 cents per share for fiscal 2013, compared with its previous forecast of 90 cents to $1.05 per share.
Analysts on average were expecting earnings of 93 cents per share, according to Thomson Reuters I/B/E/S.
For the third quarter ended December 31, comparable store sales are estimated to have declined about 9.7 percent. The video category, which includes televisions and DVDs, are expected to have fallen almost a quarter.
Sales are estimated to have fallen 3.6 percent to $799.6 million during the quarter.
The company estimated a profit of about $17.4 million, or 51 cents per share, compared with $22.5 million, or 60 cents per share, a year earlier.
Analysts on average were expecting earnings of 59 cents per share on revenue of $845.2 million.
Shares of the company were down 9 percent at $7.19 in late morning trade after falling to $6.87 earlier in the day.
(Editing by Supriya Kurane and Don Sebastian)