Reuters: Global Markets: Hhgregg shares plunge on weak forecast

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Hhgregg shares plunge on weak forecast Jul 11th 2012, 13:57 Wed Jul 11, 2012 9:57am EDT (Reuters) - Shares of Hhgregg Inc (HGG.N) lost a third of their value on Wednesday after the appliance and electronics chain cut its full-year outlook because of higher costs and shrinking demand for store-bought electronics. Stifel Nicolaus downgraded the company's stock to "hold" from "buy" and at least six other brokerages cut price targets. Brick-and-mortar retailers including Hhgregg and Best Buy Co Inc (BBY.N) have been struggling to maintain market share in the face of increasing competition from online retailers such as Amazon.com Inc (AMZN.O). "The company is planning to cut advertising and store level employment to adjust to a negative comp (comparable sales) environment, but ... despite these actions selling and administrative expenses will deleverage for fiscal 2013," analyst David Strasser of Janney Montgomery Scott said in a client note. Hhgregg has been ramping up advertising to spur sales of appliances as it attempts to move away from the video category -- including TVs and Blu-ray disc players -- where weak demand and lower prices have hurt profit. "The company continues to aggressively open new units despite ongoing structural shifts in the consumer electronics landscape and amid a weakening product cycle," analyst Brian Nagel of Oppenheimer & Co said in a note. Nagel lowered his price target on the stock to $9 from $11, citing concerns about the company's near-term prospects. The company's shares hit a 40-month low of $7.63 in early trading. The stock, which fell as much as 34 percent, was the top loser on the New York Stock Exchange. (Reporting by Aditi Shrivastava and Ranjita Ganesan in Bangalore; Editing by Maju Samuel) Link this Share this Digg this Email Reprints

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