hhgregg Inc. (HGG, Financial) filed Quarterly Report for the period ended 2010-12-31.
Hhgregg Inc. has a market cap of $706.7 million; its shares were traded at around $18.67 with a P/E ratio of 18.1 and P/S ratio of 0.5. Hedge Fund Gurus that owns HGG: Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns HGG: Ron Baron of Baron Funds.
Net sales for the three and nine months ended December 31, 2010 increased 30.6% and 40.6%, respectively, to $653.7 million and $1.6 billion, respectively, compared to the comparable prior year periods. The increases in net sales for the three and nine months ended December 31, 2010 were primarily attributable to the net addition of 46 stores during the past 12 months, offset by 6.2% and 1.4% decreases in comparable store sales for the three and nine month periods ended December 31, 2010, respectively.
Gross profit margin, expressed as gross profit as a percentage of net sales, decreased approximately 45 basis points for the nine months ended December 31, 2010 to 29.9% from 30.4%. The decrease in the gross profit margin percentage was primarily due to a net sales mix shift within the video category. The video category saw a greater increase in demand for entry level products, including smaller screen sizes which carry lower margins than bigger, more feature rich screen sizes.
Our effective income tax rate for the nine months ended December 31, 2010 increased to 39.2% compared to 38.5% in the comparable prior year period. The increase in our effective income tax rate is primarily the result of changes in the expected annual effective state income tax rate for fiscal 2011.
Senior Secured Term Loan. On July 25, 2007, Gregg Appliances entered into a senior credit agreement (the Term B Facility) with a bank group obtaining a $100 million senior secured term loan B maturing on July 25, 2013. Interest on borrowings is payable in defined periods, currently monthly, depending on our election of the banks prime rate or LIBOR plus an applicable margin, currently 200 basis points. The weighted average interest rate on the term loan as of December 31, 2010 and March 31, 2010 was 2.3% and 2.5%, respectively. We entered into an interest rate related derivative on $75 million of the Term B Facility which adjusts the effective weighted average interest rate on the Term B Facility at December 31, 2010 and March 31, 2010 to 3.9%.
Pursuant to Amendment No. 1, the borrowing base was modified to equal the sum of (i) the lesser of (a) 90% of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Prior to Amendment No. 1, the borrowing base equaled the sum of (i) the lesser of (a) 93% (96% during a seasonal period) of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Amendment No. 1 required payment to the incremental lenders of a commitment fee equal to 5.0% of the incremental commitment, or $1,250,000.
Read the The complete Report
Hhgregg Inc. has a market cap of $706.7 million; its shares were traded at around $18.67 with a P/E ratio of 18.1 and P/S ratio of 0.5. Hedge Fund Gurus that owns HGG: Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns HGG: Ron Baron of Baron Funds.
Highlight of Business Operations:
Operating Strategy and Performance. We focus the majority of our floor space, advertising expense and distribution infrastructure on the marketing, delivery and installation of a wide selection of premium video and appliance products. We display over 100 models of flat panel televisions and 350 major appliances in our stores with an especially broad assortment of models in the middle- to upper-end of product price ranges. Video and appliance net sales comprised 80% of our net sales mix for the three months ended December 31, 2010 and 2009, respectively, and 82% of our net sales mix for the nine months ended December 31, 2010 and 2009, respectively.Net sales for the three and nine months ended December 31, 2010 increased 30.6% and 40.6%, respectively, to $653.7 million and $1.6 billion, respectively, compared to the comparable prior year periods. The increases in net sales for the three and nine months ended December 31, 2010 were primarily attributable to the net addition of 46 stores during the past 12 months, offset by 6.2% and 1.4% decreases in comparable store sales for the three and nine month periods ended December 31, 2010, respectively.
Gross profit margin, expressed as gross profit as a percentage of net sales, decreased approximately 45 basis points for the nine months ended December 31, 2010 to 29.9% from 30.4%. The decrease in the gross profit margin percentage was primarily due to a net sales mix shift within the video category. The video category saw a greater increase in demand for entry level products, including smaller screen sizes which carry lower margins than bigger, more feature rich screen sizes.
Our effective income tax rate for the nine months ended December 31, 2010 increased to 39.2% compared to 38.5% in the comparable prior year period. The increase in our effective income tax rate is primarily the result of changes in the expected annual effective state income tax rate for fiscal 2011.
Senior Secured Term Loan. On July 25, 2007, Gregg Appliances entered into a senior credit agreement (the Term B Facility) with a bank group obtaining a $100 million senior secured term loan B maturing on July 25, 2013. Interest on borrowings is payable in defined periods, currently monthly, depending on our election of the banks prime rate or LIBOR plus an applicable margin, currently 200 basis points. The weighted average interest rate on the term loan as of December 31, 2010 and March 31, 2010 was 2.3% and 2.5%, respectively. We entered into an interest rate related derivative on $75 million of the Term B Facility which adjusts the effective weighted average interest rate on the Term B Facility at December 31, 2010 and March 31, 2010 to 3.9%.
Pursuant to Amendment No. 1, the borrowing base was modified to equal the sum of (i) the lesser of (a) 90% of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Prior to Amendment No. 1, the borrowing base equaled the sum of (i) the lesser of (a) 93% (96% during a seasonal period) of the net orderly liquidation value of all eligible inventory of Gregg Appliances and (b) 75% of the net book value of such eligible inventory and (ii) 90% of all commercial and credit card receivables of Gregg Appliances, in each case subject to customary reserves and eligibility criteria. Amendment No. 1 required payment to the incremental lenders of a commitment fee equal to 5.0% of the incremental commitment, or $1,250,000.
Read the The complete Report
