Back to top

Analyst Blog

hhgregg Inc. (HGG - Analyst Report) is leaving no stone unturned to revive its struggling business. Initiatives such as product innovation, focus on developing brands, exit from underperforming businesses and store openings are some of the measures taken by the company to boost sales. Most recently, hhgregg opened a store at 9501 Colerain Avenue in Cincinnati’s Northgate Mall.

In order to celebrate the new store opening and attract customers, the company will be offering special discounts in all its stores in Cincinnati through Jul 19, 2014 on hhgregg’s wide selection of televisions, appliances and electronics, as well as a new selection of wearable technology including the Jawbone Up24 and Samsung Galaxy Gear watch. Also, the first 250 customers visiting the store will receive a $10 hhgregg gift card.

The company always celebrates the opening of its stores and offers great discounts. This is surely an innovative solution to attract customers and drive sales. However, we note that hhgregg has been delivering disappointing results in the consumer electronic category since the past one year due to lower-than-expected margins and declining industry demand for flat screen televisions. Weak promotional activities are also adding to the woes. In addition, lack of innovation in televisions has been severely impacting overall store traffic.

The company has also witnessed sluggishness in same store sales in the computing and wireless category in all the quarters of fiscal 2014.  A decline in the demand for laptops and lower average selling price for tablets resulted in weak comps. Category comps declined due to the underperforming contract-based mobile phone business, which the company exited during the fourth quarter.

The company’s home products category, which showed signs of weakness during the third quarter declined further in the fourth quarter.

The company is therefore employing different initiatives to revive its business, besides store openings.  It recently hired Troy H. Risch as its new chief operating officer (COO), whose experience is expected to help the company execute its initiatives. The company will be increasing focus on its appliance category, which has continued to gain market share over the past 11 quarters. hhgregg has a Zacks Rank #3 (Hold).

A better-ranked consumer electronics retailer is Conn’s Inc. (CONN - Snapshot Report) which holds a Zacks Rank #2 (Buy). Some other retailers worth considering include Dillards Inc. (DDS - Analyst Report) and J. C. Penney Company, Inc.(JCP - Analyst Report), both with a Zacks Rank #2.

Please login to Zacks.com or register to post a comment.