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Will hhgregg's Revival Efforts Help it Bring a Turnaround?

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Appliance and electronics retailer, hhgregg, Inc. has embarked on a series of potential strategic and financial transactions in order to improve liquidity and return to profitability.

In order to reach its objectives, hhgregg stated that it plans to make investments to shift focus to appliances and furniture, which are profitable. Moreover, it has plans to undertake additional cost reduction initiatives.

The company has engaged two subsidiaries of Stifel Financial Corp. (SF) – Stifel, Nicolaus & Co., Inc. and Miller Buckfire & Co., LLC, to advise them on financial transactions.

The initiatives taken up by the company is anticipated to aid it turn around and post profitability. hhgregg has been reporting losses and declining revenues several the past quarters, primarily due to weak comps, mainly in the consumer electronics segment. The company’s home products category and appliance category are also witnessing weakness of late. The appliance category, after posting higher comps for many quarters, started reporting soft results since the last few quarters owing to lower units sold and a highly promotional environment.

In fact, the company has been exhibiting a bearish run on the index since past one year. Specifically, in the noted period, the stock has declined significantly by 77.4% in comparison with the Zacks categorized Retail-Consumer Electronics industry, which showcased growth of 34.2%.

hhgregg carries a Zacks Rank #5 (Strong Sell). One can count on better-ranked stocks which include Ross Stores Inc. (ROST - Free Report) , Fred’s Inc. and The TJX Companies Inc. (TJX - Free Report) , all carrying a Zacks Rank #2 (Buy) and having an expected earnings growth of 10.7%, 8% and 10%, respectively. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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