hhgregg announced operating results for the first fiscal quarter ended June 30

First Fiscal Quarter Summary

• Net sales decreased 4.0% to $424 million compared to prior year first fiscal quarter.
• Comparable store sales decreased 3.9% compared to the prior year first fiscal quarter, a sequential improvement compared to the prior year fiscal quarter. Appliance comparable store sales increased 3.7%.
• Continued to successfully shift more sales mix to appliances, which accounted for 64% of sales for the first fiscal quarter.
• Gross margin increased to 31.0% compared to 30.5% in the prior year first fiscal quarter.
• Net loss per diluted share was $0.26. Net loss per diluted share, as adjusted, was $0.21. In the prior year first fiscal quarter, net loss per diluted share was $0.32 and net loss per diluted share, as adjusted, was $0.17.
• As of June 30, 2016, there were no borrowings outstanding on the recently amended $300 million credit facility.

Robert Riesbeck, President and Chief Executive Officer and Chief Financial Officer, commented, "We delivered a solid first fiscal quarter and are off to a positive start to our fiscal year. We made progress toward our top company goal of driving revenue. We improved comps sequentially from last quarter and year-over-year, driven by appliances, which generated a 3.7% comparable store sales increase in the quarter, along with our continued growth in furniture. We improved our top-line in appliances while protecting our margins. Our total company gross margin increased and we were able to generate positive EBITDA. As the fiscal year progresses we will continue to invest in Fine Lines and store resets to help with our relentless efforts to grow net sales and profitability this fiscal year."

		Three Months Ended
		June 30,
(unaudited, amounts in thousands, except share and per share data)		2016				2015
Net sales		$	423,572			$	441,063
Net sales % decrease		(4.0		)%		(6.6		)%
Comparable store sales % decrease (1)		(3.9		)%		(6.3		)%
Gross profit as a % of net sales		31.0		%		30.5		%
SG&A as a % of net sales		25.5		%		25.2		%
Net advertising expense as a % of net sales		5.4		%		5.2		%
Depreciation and amortization expense as a % of net sales		1.6		%		1.9		%
Loss from operations as a % of net sales		(1.5		)%		(1.9		)%
Net interest expense as a % of net sales		0.2		%		0.1		%
Net loss		$	(7,227	)		$	(8,755	)
Net loss, as adjusted (2)		$	(5,742	)		$	(4,822	)
Net loss per diluted share		$	(0.26	)		$	(0.32	)
Net loss per diluted share, as adjusted (2)		$	(0.21	)		$	(0.17	)
Adjusted EBITDA		$	2,016			$	4,132
Weighted average shares outstanding—diluted		27,741,261				27,680,209
Number of stores open at the end of period		226				227

(1)		Comprised of net sales at stores in operation for at least 14 full months, including remodeled and relocated stores, as well as net sales for the Company's e-commerce site.
(2)		Amounts are adjusted to exclude the impact of severance and personnel costs related to organizational changes related to our transformation efforts, consulting expenses paid to outside parties to assist with our transformation efforts, costs associated with our logistics optimization project and debt issuance costs written off with the June 2016 amendment to our Facility. See the attached reconciliation of non-GAAP measures to GAAP measures

HIGHLIGHTS FOR THE FIRST FISCAL QUARTER

Revenue Highlights

The Company's net sales performance for the quarter was driven primarily by a comparable store sales decline. Net sales mix and comparable store sales percentage changes by product category for the three month periods ended June 30, 2016 and 2015 were as follows:

		Net Sales Mix Summary						Comparable Store Sales Summary
		Three Months Ended June 30						Three Months Ended June 30
		2016			2015			2016			2015
Appliances		64	%		59	%		3.7	%		(2.2	)%
Consumer electronics (1)		30	%		35	%		(17.4	)%		(14.8	)%
Home products (2)		6	%		6	%		0.3	%		12.1	%
Total		100	%		100	%		(3.9	)%		(6.3	)%

(1)		Primarily consists of televisions, audio, personal electronics, computers and tablets and accessories.
(2)		Primarily consists of furniture and mattresses.

The Company's comparable store sales drivers for the three months ended June 30, 2016 are summarized below:

		Comparable Store Sales			Average Selling Price		Sales Unit Volume
Appliances		3.7	%		Decrease		Increase
Consumer electronics (1)		(17.4	)%		Decrease		Decrease
Home products (2)		0.3	%		Increase		Decrease
Total		(3.9	)%

Gross Margin Highlights

The Company's gross profit margin, expressed as gross profit as a percentage of net sales, increased for the three month period ended June 30, 2016 to 31.0% from 30.5% for the comparable prior year period.

• The Company's increase in gross profit margin for the period was primarily a result of a favorable product sales mix to categories with higher gross margin rates in addition to higher gross margin rates in appliances and home products, partially offset by lower gross profit margin rates in consumer electronics.

Cost Structure Highlights

The Company continues to manage its cost structure to align with its expected sales levels and to keep the Company positioned for EBITDA growth.

Teleconference and Webcast

hhgregg will be conducting a conference call to discuss operating results for the three months ended June 30, 2016, on Thursday, August 4, 2016 at 9:00 a.m. (Eastern Time). Our call will be hosted by Robert Riesbeck, our President and CEO and CFO and Lance Peterson, our Director of Finance & Investor Relations.

Interested investors and other parties may listen to a simultaneous webcast of the conference call by logging onto hhgregg's website at www.hhgregg.com. The on-line replay will be available for a limited time immediately following the call. The call can also be accessed live over the phone by dialing (877) 304-8963. Callers should reference the hhgregg earnings call.

About hhgregg

hhgregg is an appliance, electronics and furniture retailer that is committed to providing customers with a truly differentiated purchase experience through superior customer service, knowledgeable sales associates and the highest quality product selections. Founded in 1955, hhgregg is a multi-regional retailer currently with 226 stores in 20 states that also offers market-leading global and local brands at value prices nationwide via hhgregg.com.

Forward Looking Statements

The following is a Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes forward-looking statements, including with respect to the Company's financial performance, ability to manage costs, ability to execute the Company's 2017 initiatives, innovation in the video industry, the impact and amount of non-cash charges, and shifts in the Company's sales mix. hhgregg has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While hhgregg believes these expectations, assumptions, estimates and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond its control. These and other important factors may cause hhgregg's actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from hhgregg's expectations are: the ability to successfully execute the Company's strategies and initiatives, particularly in returning the Company to profitable growth; the Company's ability to increase customer traffic and conversion; competition in the retail industry; the Company's ability to maintain a positive brand perception and recognition; the Company's ability to attract and retain qualified personnel; the Company's ability to maintain the security of customer, associate and Company information; rules, regulations, contractual obligations, compliance requirements and fees associated with accepting a variety of payment methods; the Company's ability to effectively achieve cost cutting initiatives; the Company's ability to generate strong cash flows to support its operating activities; the Company's relationships and operations of its key suppliers; the Company's ability to generate sufficient cash flows to recover the fair value of long-lived assets; the Company's ability to maintain and upgrade its information technology systems; the fluctuation of the Company's comparable store sales; the effect of general and regional economic and employment conditions on the Company's net sales; the Company's ability to meet financial performance guidance; disruption in the Company's supply chain; changes in trade regulation, currency fluctuations and prevailing interest rates; and the potential for litigation.

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this press release are more fully described in the "Risk Factors" section in the Company's Annual Report on Form 10-K for fiscal year 2016 filed May 19, 2016. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. hhgregg does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any of these statements to reflect future events or developments.

HHGREGG, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three Months Ended
		June 30, 2016				June 30, 2015
		(In thousands, except share and per share data)
Net sales		$	423,572			$	441,063
Cost of goods sold		292,063				306,706
Gross profit		131,509				134,357
Selling, general and administrative expenses		108,109				111,104
Net advertising expense		22,869				23,054
Depreciation and amortization expense		6,978				8,369
Loss from operations		(6,447		)		(8,170		)
Other expense (income):
Interest expense		785				590
Interest income		(5		)		(5		)
Total other expense		780				585
Loss before income taxes		(7,227		)		(8,755		)
Income taxes		—				—
Net loss		$	(7,227	)		$	(8,755	)
Net loss per share
Basic and diluted		$	(0.26	)		$	(0.32	)
Weighted average shares outstanding-basic and diluted		27,741,261				27,680,209

HHGREGG, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (AS A PERCENTAGE OF NET SALES) (UNAUDITED)
		Three Months Ended
		June 30, 2016			June 30, 2015
Net sales		100.0	%		100.0	%
Cost of goods sold		69.0			69.5
Gross profit		31.0			30.5
Selling, general and administrative expenses		25.5			25.2
Net advertising expense		5.4			5.2
Depreciation and amortization expense		1.6			1.9
Loss from operations		(1.5	)		(1.9	)
Other expense (income):
Interest expense		0.2			0.1
Interest income		—			—
Total other expense		0.2			0.1
Loss before income taxes		(1.7	)		(2.0	)
Income taxes		—			—
Net loss		(1.7	)		(2.0	)

Certain percentage amounts do not sum due to rounding

HHGREGG, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2016, MARCH 31, 2016 AND JUNE 30, 2015 (UNAUDITED)
		June 30, 2016				March 31, 2016				June 30, 2015
		(In thousands, except share data)
Assets
Current assets:
Cash		$	1,214			$	3,703			$	9,742
Accounts receivable—trade, less allowances of $3, $5 and $13 as of June 30, 2016, March 31, 2016 and June 30, 2015, respectively		17,131				11,106				17,178
Accounts receivable—other		18,672				14,937				16,109
Merchandise inventories, net		292,025				256,559				324,551
Prepaid expenses and other current assets		10,021				6,333				10,229
Income tax receivable		1,107				1,130				5,345
Total current assets		340,170				293,768				383,154
Net property and equipment		85,236				87,472				123,985
Deferred financing costs, net		2,432				1,257				1,661
Deferred income taxes		—				—				7,816
Other assets		3,239				2,855				2,914
Total long-term assets		90,907				91,584				136,376
Total assets		$	431,077			$	385,352			$	519,530
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	145,383			$	107,474			$	167,108
Line of credit		—				—				—
Customer deposits		54,682				43,235				49,737
Accrued liabilities		49,466				43,370				52,161
Deferred income taxes		—				—				7,816
Total current liabilities		249,531				194,079				276,822
Long-term liabilities:
Deferred rent		56,598				59,101				66,107
Other long-term liabilities		10,381				10,818				10,870
Total long-term liabilities		66,979				69,919				76,977
Total liabilities		316,510				263,998				353,799
Stockholders' equity:
Preferred stock, par value $.0001; 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2016, March 31, 2016 and June 30, 2015, respectively		—				—				—
Common stock, par value $.0001; 150,000,000 shares authorized; 41,291,415, 41,204,660 and 41,204,660 shares issued; and 27,794,733, 27,707,978 and 27,707,978 outstanding as of June 30, 2016, March 31, 2016, and June 30, 2015, respectively		4				4				4
Additional paid-in capital		304,765				304,325				302,578
Accumulated deficit		(39,974		)		(32,747		)		13,377
Common stock held in treasury at cost; 13,496,682 shares as of June 30, 2016, March 31, 2016, and June 30, 2015		(150,228		)		(150,228		)		(150,228		)
Total stockholders' equity		114,567				121,354				165,731
Total liabilities and stockholders' equity		$	431,077			$	385,352			$	519,530

HHGREGG, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JUNE 30, 2016 AND 2015 (UNAUDITED)
		Three Months Ended
		June 30, 2016				June 30, 2015
		(In thousands)
Cash flows from operating activities:
Net loss		$	(7,227	)		$	(8,755	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		6,978				8,369
Amortization of deferred financing costs		135				135
Stock-based compensation		440				898
Excess tax benefit from stock based compensation		126				—
Gain on sales of property and equipment		(63		)		(78		)
Tenant allowances received from landlords		—				580
Changes in operating assets and liabilities:
Accounts receivable—trade		(6,025		)		(5,277		)
Accounts receivable—other		(3,735		)		46
Merchandise inventories		(35,466		)		(67,082		)
Income tax receivable		23				(19		)
Prepaid expenses and other assets		(4,004		)		(3,645		)
Accounts payable		44,905				55,081
Customer deposits		11,447				995
Accrued liabilities		6,096				5,438
Deferred rent		(2,503		)		(1,848		)
Other long-term liabilities		(370		)		(1,072		)
Net cash provided by (used in) operating activities		10,757				(16,234		)
Cash flows from investing activities:
Purchases of property and equipment		(3,910		)		(4,304		)
Proceeds from sales of property and equipment		4				11
Purchases of corporate-owned life insurance		(68		)		(73		)
Net cash used in investing activities		(3,974		)		(4,366		)
Cash flows from financing activities:
Net repayments on inventory financing facility		(7,836		)		(59		)
Payment of financing costs		(1,436		)		—
Net cash used in financing activities		(9,272		)		(59		)
Net decrease in cash and cash equivalents		(2,489		)		(20,659		)
Cash and cash equivalents
Beginning of period		3,703				30,401
End of period		$	1,214			$	9,742
Supplemental disclosure of cash flow information:
Interest paid		$	647			$	459
Income taxes (received) paid		$	(23	)		$	19
Capital expenditures included in accounts payable		$	2,105			$	1,352