Zacks Investment Research downgraded shares of hhgregg Inc (HGG) from OUTPERFORM to NEUTRAL on November 18, 2013, with a target price of $18.00.
We are reverting back to a Neutral recommendation on hhgregg from Outperform after the company posted weak second quarter fiscal 2014 results, missing the Zacks Consensus Estimate on both counts. However, earnings of $0.12 per share increased 9.1% on a year-over-year basis, driven by a decline in SG&A expense ratio and lower share count owing to share buyback. Net sales declined 3.3% in the reported quarter due to a decline in comps. Comps were adversely affected by a weak retail sales environment owing to low consumer confidence. However, the company's long term fundamentals are appealing as management is geared to improve its business performance with the help of several strategic initiatives designed to boost traffic in its stores. The company is also focusing on cost control measures and has drawn initiatives to improve its merchandise sales mix and expand its service offerings and customer base.
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