August 14, 2007

hhgregg, Inc. Announces Operating Results for the Fiscal Quarter Ended June 30, 2007

INDIANAPOLIS, Aug 14, 2007 (BUSINESS WIRE) --

hhgregg, Inc. (NYSE:HGG):

                    Operating Performance Summary
           (dollars in thousands, except per share amounts)

                                           Three Months Ended June 30,
                                           ---------------------------
(unaudited)                                    2007          2006
                                           ------------- -------------
Net sales                                      $254,159      $203,248
Net sales % gain                                   25.0%          9.9%
Comparable store sales % gain (1)                   8.8%          1.0%
Gross profit as % of net sales                     31.2%         30.7%
SG&A as % of net sales                             23.3%         24.7%
Net advertising expense as % of net sales           4.4%          4.9%
Income from operations                              3.6%          1.1%
Net income (loss)                                $2,873       $(1,377)
Diluted net income (loss) per share               $0.10        $(0.05)

(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 our e-commerce site.

hhgregg, Inc. ("hhgregg") today reported net income of $2.9 million, or $0.10 per diluted share, for its first quarter of fiscal 2008, compared with a net loss of $1.4 million, or $(0.05) per diluted share, in the comparable prior year period. The improvement in earnings reflects strong comparable store sales growth, an increase in our gross profit rate, improved leverage in SG&A and net advertising rates and reduced interest expense due to significant debt reductions during the past 12 months.

First Quarter Operating Performance Recap

Net sales for the three months ended June 30, 2007 increased 25.0% to $254.2 million from $203.2 million for the three months ended June 30, 2006. This increase in sales was primarily attributable to the addition of ten stores during the past 12 months and an 8.8% increase in comparable store sales during the first quarter of fiscal 2008.

Net sales mix and comparable store sales percentage changes by product category for the three months ended June 30, 2007 and 2006 were as follows:

               Net Sales Mix Summary    Comparable Store Sales Summary
            --------------------------- ------------------------------
            Three Months Ended June 30,  Three Months Ended June 30,
            --------------------------- ------------------------------
                 2007          2006          2007           2006
            -------------- ------------ -------------- ---------------
Video                  39%          39%           9.5%           1.9%
Appliances             47%          48%           6.9%           1.3%
Other (1)              14%          13%          18.7%          (3.0)%
            -------------- ------------ -------------- ---------------
   Total              100%         100%           8.8%           1.0%
            ============== ============ ============== ===============

(1) Primarily consists of audio, personal electronics, mattresses and computer notebooks.

hhgregg's 8.8% comparable store sales increase for the three months ended June 30, 2007 primarily reflects a higher average selling price driven by continued increases in sales of higher-ticket items in video, major appliances and mattresses. Our video sales performance was fueled by triple-digit flat panel television sales growth, particularly in larger screen sizes, outpacing the double-digit sales decline in projection and tube televisions. Our appliance product category growth reflected continuing, increased demand for high-efficiency, major appliances, particularly in the laundry, dishwasher and cooking sub-categories. The comparable store sales increase in our other product category was primarily due to the company-wide roll-out of mattresses in the early part of fiscal 2007.

Gross profit measured as a percentage of sales increased by 0.5% to 31.2% for the three months ended June 30, 2007 from 30.7% for the three months ended June 30, 2006. The increase in gross profit rate was primarily attributable to improved product mix and margin in key merchandise categories.

SG&A expenses decreased by 1.4%, as a percentage of sales, from 24.7% for the three months ended June 30, 2006 to 23.3% for the three months ended June 30, 2007. The decrease in SG&A rate for the three months ended June 30, 2007 was primarily attributable to the leveraging effect of our sales growth across many expense categories and decreases in insurance and depreciation expense.

As a percentage of sales, net advertising expense decreased 0.5% to 4.4% for the three months ended June 30, 2007 from 4.9% for the three months ended June 30, 2006. The decrease was primarily attributable to an increase in vendor support.

hhgregg will be conducting a conference call to discuss operating results for the three months ended June 30, 2007, on Tuesday, August 14, 2007 at 10:00 a.m. (Eastern Time). Interested investors and other parties may listen to a simultaneous web cast 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 (800) 811-8830. Callers should reference the hhgregg First Quarter 2008 Earnings.

Information regarding non-GAAP financial measures, including Adjusted EBITDA (earnings before net interest expense, income tax expense, depreciation and amortization) and debt leverage, that will be discussed in the conference call can be found at www.hhgregg.com on the investor relations page.

FY 2008 Guidance

The Company expects diluted net income per share, as adjusted to exclude the loss on early extinguishment of debt, to range between $0.87 and $0.97 for the fiscal year ended March 31, 2008. The loss related to the early extinguishment of debt, arising from the debt refinancing consummated on July 25, 2007 in connection with the Company's initial public offering, is expected to range between $0.41 and $0.42 per share, net of tax. The Company expects annual net sales for fiscal 2008 to increase between 15% to 18% over fiscal 2007 with 13 to 15 new store openings and comparable store sales growth of 3% to 5%. In addition, the Company expects that fiscal 2008 capital expenditures, net of sales and leaseback proceeds, to range between $22 million and $24 million.

About hhgregg

hhgregg is a specialty retailer of consumer electronics, home appliances, mattresses and related services operating under the names hhgregg(R) and Fine Lines(R). hhgregg currently operates 79 stores in Alabama, Georgia, Indiana, Kentucky, North Carolina, Ohio, South Carolina and Tennessee.

Safe Harbor Statement

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

This press release includes forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should," or "will," or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the expectations, beliefs, plans, objectives, assumptions or future events or performance of hhgregg, Inc. are forward-looking statements.

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: competition in existing, adjacent and new metropolitan markets; changes in consumer preferences; its ability to effectively manage and monitor its operations, costs and service quality; its reliance on a small number of suppliers; rapid inflation or deflation in core product prices; the failure of manufacturers to introduce new products and technologies; customer acceptance of new technology; its dependence on our key management personnel and its ability to attract and retain qualified sale's personnel; its ability to negotiate with its suppliers to provide product on a timely basis at competitive prices; the identification and acquisition of suitable sites for its stores and the negotiation of acceptable leases for those sites; the effect of general and regional economic and employment conditions on its net sales; fluctuation in seasonal demand; its ability to maintain its rate of growth and penetrate new geographic areas; its ability to locate suitable new store sites; its ability to obtain additional financing and maintain its credit facilities; its ability to maintain and upgrade its information technology systems; the effect of a disruption at our central distribution centers; changes in cost for print, radio and television advertising; and changes in trade regulations, currency fluctuations and prevailing interest rates.

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 prospectus filed pursuant to Rule 424(b)(4) with the SEC on July 20, 2007. 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,         June 30,
                                             2007             2006
                                     --------------------- -----------
                                     (In thousands, except share data)

Net sales                                        $254,159    $203,248
Cost of goods sold                                174,801     140,777
                                     --------------------- -----------
          Gross profit                             79,358      62,471
Selling, general and administrative
 expenses                                          59,233      50,271
Net advertising expense                            11,057       9,982
                                     --------------------- -----------
          Income from operations                    9,068       2,218
                                     --------------------- -----------
Other expense (income):
   Interest expense                                 3,612       4,630
   Interest income                                     (5)         (5)
   Loss (gain) related to early
    extinguishment of debt                            608        (168)
                                     --------------------- -----------
          Total other expense                       4,215       4,457
                                     --------------------- -----------
Income (loss) before income taxes                   4,853      (2,239)
Income tax expense (benefit)                        1,980        (862)
                                     --------------------- -----------
          Net income (loss)                        $2,873     $(1,377)
                                     ===================== ===========
Basic net income (loss) per share                   $0.10      $(0.05)
Diluted net income (loss) per share                 $0.10      $(0.05)
Weighted average shares outstanding--
 Basic                                         28,491,600  28,509,600
Weighted average shares outstanding--
 Diluted                                       29,536,938  28,671,144

                    HHGREGG, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (AS A PERCENTAGE OF SALES)
                             (UNAUDITED)

                                                  Three Months Ended
                                                ----------------------
                                                 June 30,   June 30,
                                                   2007       2006
                                                ---------- -----------

Net sales                                           100.0%      100.0%
Cost of goods sold                                    68.8        69.3
                                                ---------- -----------
          Gross profit                                31.2        30.7
Selling, general and administrative expenses          23.3        24.7
Net advertising expense                                4.4         4.9
                                                ---------- -----------
          Income from operations                       3.6         1.1
                                                ---------- -----------
Other expense (income):
   Interest expense                                    1.4         2.3
   Interest income                                       -           -
   Loss (gain) related to early extinguishment
    of debt                                            0.2       (0.1)
                                                ---------- -----------
          Total other expense                          1.7         2.2
                                                ---------- -----------
Income (loss) before income taxes                      1.9       (1.1)
Income tax expense (benefit)                           0.8       (0.4)
                                                ---------- -----------
          Net income (loss)                           1.1%      (0.7)%
                                                ========== ===========

Certain percentage amounts do not sum due to rounding

                    HHGREGG, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                             (UNAUDITED)

                                         June 30,         March 31,
                                            2007             2007
                                     ------------------ --------------
                                     (In thousands, except share data)

                    ASSETS
Current assets:
  Cash and cash equivalents                     $1,328         $1,498
  Accounts receivable - trade, less
   allowances of $255 and $409,
   respectively                                 13,308         10,641
  Accounts receivable - other, less
   allowances of $26 and $16,
   respectively                                 12,450         11,203
  Merchandise inventories                      120,914        113,602
  Prepaid expenses and other current
   assets                                        4,549          7,239
  Deferred income taxes                          1,653          1,574
                                     ------------------ --------------
          Total current assets                 154,202        145,757
                                     ------------------ --------------
   Net property and equipment                   54,273         52,129
   Deferred financing costs, net                 5,818          6,342
   Deferred income taxes                        85,463         85,891
   Other                                           371            406
                                     ------------------ --------------
                                               145,925        144,768
                                     ------------------ --------------
          Total assets                        $300,127       $290,525
                                     ================== ==============

      LIABILITIES AND STOCKHOLDERS'
       EQUITY
Current liabilities:
  Accounts payable - vendors                   $77,502        $73,973
  Line of credit                                 9,940              -
  Customer deposits                             17,766         16,958
  Accrued liabilities                           34,173         36,325
                                     ------------------ --------------
          Total current liabilities            139,381        127,256
                                     ------------------ --------------
Long-term liabilities:
  Long-term debt                               129,597        134,459
  Other long-term liabilities                   11,448         12,517
                                     ------------------ --------------
          Total long-term liabilities          141,045        146,976
                                     ------------------ --------------
          Total liabilities                    280,426        274,232
                                     ------------------ --------------

Stockholders' equity:
  Preferred stock; no par value;
   10,000,000 shares authorized; no
   shares issued and outstanding as
   of June 30, 2007 and March 31,
   2007                                              -              -
  Common stock; no par value;
   52,500,000 shares authorized;
   28,491,600 shares issued and
   outstanding as of June 30, 2007
   and March 31, 2007                          114,421        113,909
  Accumulated deficit                          (94,528)       (97,401)
                                     ------------------ --------------
                                                19,893         16,508
      Note receivable for common
       stock                                      (192)          (215)
                                     ------------------ --------------
           Total stockholders' equity           19,701         16,293
                                     ------------------ --------------
           Total liabilities and
            stockholders' equity              $300,127       $290,525
                                     ================== ==============

                    HHGREGG, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (UNAUDITED)

                                            Three Months Ended
                                     ---------------------------------
                                         June 30,         June 30,
                                           2007             2006
                                     ----------------- ---------------

                                     (In thousands, except share data)
Operating activities:
  Net income (loss)                            $2,873         $(1,377)
  Adjustments to reconcile net income
   (loss) to net cash provided by
   (used in) operating activities:
     Depreciation and amortization              2,828           2,983
     Amortization of deferred
      financing costs                             316             396
     Accretion of original issue
      discount                                    138             124
     Stock-based compensation                     512               -
     (Gain) loss on disposal of
      assets                                      (16)             20
     Loss (gain) on early
      extinguishment of debt                      608            (168)
     Deferred income taxes                        349            (878)
     Changes in operating assets and
      liabilities:
       Accounts receivable - trade             (2,667)         (1,100)
       Accounts receivable - other             (1,248)         (1,379)
       Merchandise inventories                 (7,312)        (10,033)
       Prepaid expenses and other
        assets                                 (1,062)            411
       Deposits                                 3,787           2,207
       Accounts payable - third
        parties                                     -          (1,050)
       Accounts payable - vendors               8,297           7,523
       Customer deposits                          808            (580)
       Other accrued liabilities               (2,036)         (1,983)
       Other long-term liabilities             (2,059)            225
                                     ----------------- ---------------
          Net cash provided by (used
           in) operating activities             4,116          (4,659)
                                     ----------------- ---------------
Investing activities:
  Purchases of property and equipment          (6,969)         (2,356)
  Proceeds from sale and leaseback
   transaction                                  2,300           2,725
  Deposit on future sale and
   leaseback transaction                          700               -
  Proceeds from sales of property and
   equipment                                        4              85
                                     ----------------- ---------------
          Net cash (used in) provided
           by investing activities             (3,965)            454
                                     ----------------- ---------------
Financing activities:
  Net (decrease) increase in bank
   overdrafts                                  (4,768)          1,556
  Net borrowings on line of credit              9,940           8,800
  Payments received on notes
   receivable for issuance of common
   stock from GIC                                  23               4
  Payment for early debt
   extinguishment                              (5,516)         (7,445)
                                     ----------------- ---------------
          Net cash (used in) provided
           by financing activities               (321)          2,915
                                     ----------------- ---------------
Net decrease in cash and cash
 equivalents                                     (170)         (1,290)
Cash and cash equivalents:
  Beginning of period                           1,498           2,301
                                     ----------------- ---------------
  End of period                                $1,328          $1,011
                                     ================= ===============

Supplemental disclosure of cash flow
 information:
  Interest paid                                  $312            $322
  Income taxes paid                             4,781               -

SOURCE: hhgregg, Inc.

hhgregg, Inc.
Andy Giesler, 317-848-8710
Director of Investor Relations
investorrelations@hhgregg.com

Copyright Business Wire 2007

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