Best Buy Co. Inc. (NYSE: BBY) has a market cap of more than $13.5 billion. hhgregg Inc. (NYSE: HGG) has a market cap of just about $390 million. Both are in the same business, and the smaller one is leading the larger one lower after announcing weak preliminary quarterly results.
hhgregg said Monday morning that sales of consumer electronics, computers and wireless products were considerably below the company’s expectations for its third fiscal quarter ending in December. Sales of consumer electronics fell nearly 20%, and sales in the store’s computing and wireless products division were down nearly 25%. The bright spot was home products, like appliances and home furnishings, is expected to post a gain of about 36%.
Here is what hhgregg’s CEO had to say about the quarter:
Our holiday sales were significantly impacted by increased promotional offerings of televisions and tablet products across a variety of retail formats. While we are disappointed with these sales results, we made the strategic decision during the quarter not to fully participate in the heavily promotional environment. We did manage our inventory and liquidity position well, with total inventory per store below prior year levels.
When Best Buy reported third-quarter earnings, the company’s CEO said it would compete on promotional prices and margins be damned. The company must have been serious because on Friday it offered a two-day deal for a free iPhone 5C from Apple Inc. (NASDAQ: AAPL) or a Samsung Galaxy S4 with a two-year contract on one of the three major wireless carriers.
hhgregg stock was down around 7% in early trading Monday, at $12.65 in a 52-week range of $6.87 to $20.75. Best Buy was down about 3.5%, at $39.32 in a 52-week range of $11.38 to $44.66.