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HGG surges 22%!

posted Nov 20, 2011, 1:42 PM by Mohit Kumar

Our portfolio continues to crush the market, big time!

Hhgregg Inc. (NYSE:HGG) reported stunning second-quarter operating results. Income from continuing operations for the quarter was $6.0 million or 16 cents per share, nicely tearing apart the analyst estimate of 6 cents. Net income and earnings increased 54% and 60%, respectively, from the year-ago quarter. The increase was primarily attributable to a jump in net sales that was due to the net addition of 36 stores during the past year.

Consumer spending is still very weak for the big money items that HGG sells, but the firm smartly drove an increase in traffic through the store by offering discounts on TVs. It must be kept in mind though that this quarter comprises a small portion of overall earnings for HGG and other electronics retailers. 16 cents is only about 15% of the full year's earnings. Additionally, debt has started to show up on the balance sheet again. I expect the debt to be short term as they gear up for the holiday season!

Our faith in another unpopular, but promising business is bearing fruits now and we look forward to the next few quarters for more consistent growth in HGG.

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