Appliance and electronics retailer, hhgregg, Inc. has affirmed that it plans to open 25-30 Fine Lines appliance stores over the next two years. hhgregg currently has 14 Fine Lines stores.

The expansion of these high-performing retail format stores will strengthen hhgregg’s position in the appliance category.

Fine Lines high-end appliance locations are connected to hhgregg stores and feature a wide selection of premium appliance brands, including SubZero, Wolf, Viking, Thermador, JennAir, KitchenAid, Bosch, GE Monogram and Miele, in order to help customers create their dream kitchens.

Fine Lines departments incorporate ultra-premium appliance brands that have historically generated higher revenues. Further, hhgregg’s stores with Fine Lines continue to outperform in the Appliances category compared to those stores which do not have a Fine Line. Within the appliance category, the company expects to continue to focus on financing and to shift marketing spend around Appliances to create more purchasing options for its customers.

HHGREGG INC Price

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We note that hhgregg has been reporting losses and declining revenues since the past many quarters, primarily due to weak comparable store sales. The company has been witnessing sluggishness in same-store sales of the consumer electronics segment and computers and tablets category. The company’s home products category and appliance category have also remained weak.

In terms of revenue opportunities, the company is pinning its hopes on the appliance category, as this happens to be the key revenue driver for the company. In order to revive the appliance business, the company plans to refresh the assortment and experience across channels while continuing to enhance its product selection by creating additional Fine Lines departments.

hhgregg has also employed strategic initiatives in order to focus on stabilizing the business by reversing the negative sales trends, optimizing marketing spending and improving the cost structure. These initiatives have led to positive EBITDA results in the last reported fourth quarter fiscal 2016 results. Cost savings have also increased.

For fiscal 2017, the company expects to drive growth in the appliance and home products categories and boost omni-channel sales. The company expects to continue to generate positive comps store sales performance in appliances throughout fiscal 2017. The company is also on track to add up to 15 Fine Lines appliance departments in its stores by the end of fiscal 2017, more than doubling the number as of the end of Mar 2016.

hhgregg has a Zacks Rank #3 (Hold).

Better-ranked retailers in the broader market include Wal-Mart Stores, Inc. (WMT Quick QuoteWMT - Free Report) , Best Buy Co., Inc. (BBY Quick QuoteBBY - Free Report) and The TJX Companies, Inc. (TJX Quick QuoteTJX - Free Report) . All of them carry a Zacks Rank #2 (Buy).

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