This one is long overdue, hhgregg has finally realized they need to make some drastic changes according to this Dispatch report. Unfortunately, this involves closing stores…something they haven’t come to terms with yet.
Struggling appliance and electronics retailer hhgregg, unable to turn its fortunes around on its own, has brought in outside advisers to help it return to profitability.
The Indianapolis-based company has engaged financial adviser Stifel, Nicolaus & Co. and investment banker Miller Buckfire & Co. to pursue “a range of potential strategic and financial transactions,” the company said.
“We are committed to improving our results through our business strategy, including investments made to shift our focus to appliances and furniture, and additional expected cost reductions,” Robert J. Riesbeck, president and CEO, said in a statement. “We believe it is an appropriate time to explore potential strategic transactions.”
An hhgregg spokeswoman added in an email: “We are focused on improving the overall business results, and remain fully committed to serving our customers’ needs.”
Founded in 1955, hhgregg has 220 stores in 19 states. In central Ohio, the retailer has locations in the Dublin area, Easton, Grove City, Hilliard, Reynoldsburg, Heath and Chillicothe.
The company’s turnaround strategy could include closing some stores in central Ohio, said local retail analyst Chris Boring.
“They built the company to support a much higher level of sales, so they’ll have to do something,” Boring said. “They have to find a way to reduce costs. They’re going to have to look at lease expiration on a store-by-store basis and see which ones make sense to close.”
Shutting down the whole company is unlikely, at least for now, Boring said.
“I still see value there,” he said. “It could make a strategic fit with another retail chain. They’re still a major player in the appliance category. That’s one of the few retail categories that hasn’t been affected by online sales. Not many people will order a washer online.
“But they’re going to have to get out of consumer electronics. That’s where online has really made an impact.”
The company has struggled for years in the highly competitive electronics retail market and suffered a poor holiday sales season. In its most recent quarterly earnings report, hhgregg reported that sales decreased to $453 million from $593.2 million the same quarter the year before, badly missing the expectations of Wall Street analysts, who predicted $564 million in sales. Comparable store sales, a key indicator of a retailer’s health, plummeted by 22.2 percent.