It is only March, and already we have witnessed the increasing volatility of the retail industry. This year alone The Limited, Wet Seal, BCBG, and American Apparel have all filed for bankruptcy, and many other companies remain on the chopping block. In an attempt to avoid being next on the list appliance retailer hhgregg is taking drastic measures and laid out a plan this week that they hope will make the company profitable again.
Thursday hhgregg announced that the strategy would include closing three distribution facilities and 88 of their 226 stores that are underperforming, which is roughly 40% of their locations altogether. CEO Robert J. Riesbeck said in a press release, “This is a proactive decision to streamline our store footprint in the markets where we have been and will continue to be, important to our customers, vendor partners, and communities. We feel strongly that the markets we will remain in are the right ones for our customers and our business model.”
The states where stores are expected to close are Alabama, Delaware, Florida, Illinois, Georgia, Louisiana, Maryland, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia. Distribution and delivery centers to close are in Maryland, Florida, and Pennsylvania.
Hhgregg has been in financial trouble for some time now. Their stock value has declined more than 60% over the last year, and they were even warned by the New York Stock Exchange that they could be delisted for failing to meet the minimum listing price requirement. Their financial trouble is very similar to that of competitor Sears.
It is no secret that Sears has been hanging on by a very thin thread over the last few years, and it appears that thread is about to spilt. They announced the closing of 150 stores to stop the hemorrhage of cash, but it could still prove to be too little too late.
Both Sears and hhgregg were considered top appliance stores during their hay days, but the continued poor economic climate and increase of competition has resulted in both stores losing their footing and stumbling into downward spirals financially.
Will these one-time appliance giants be able to make it through 2017? Because the question is no longer if, but when these companies will be forced to throw in the towel.