hhgregg has evolved from black-and-white to digital. The appliance and electronics retailer began as a small storefront selling washing machines, refrigerators, and black-and-white TVs. Today, the fast-growing company sells name-brand products at more than 225 stores in about 20 mostly southern states and online. Its offerings include TV and video products (LED TVs, Blu-ray disc players), home and car audio gear (CD players, home theater systems), appliances (refrigerators, washers and dryers), computers, gaming consoles, digital cameras, GPS navigators, and mattresses. Founded in 1955, hhgregg has been growing aggressively amid tough economic conditions and a bleak outlook for consumer electronics retailers.
hhgregg operates stores in Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Jersey, North Carolina, Ohio. Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin. Florida, with 35 stores, is the retailer's largest market.
In addition to its fast-growing chain of retail stores, hhgregg is working to expand its online operation. The appliances and electronics retailer offers shoppers the option of buying online and then picking up their purchase in the store or home delivery for online orders.
The company's sales dipped 1% in fiscal 2013 (ended March) versus the prior year, while net income declined 69% over the same period. The decline in sales was due to a 9% drop in same-store sales (sales at stores open for more than 1 year), partially offset by the addition of 20 new stores. The steep decline in net income was attributed to the receipt of $40 million of life insurance proceeds in fiscal 2012 (the executive chairman of the board passed away in January 2012), the decline in same-store sales, and an increase in general expenses, as well as higher advertising expenses as a percentage of net sales.
The modest decline in fiscal 2013 sales reversed three years of gains for the retail chain,
Sensing opportunity, hhgregg adopted an accelerated growth strategy in the aftermath of the demise its rival Circuit City in 2009. Indeed, over the past four years the chain has added about 120 stores, many in new markets. The retail chain looks to new locations to fuel sales and income growth. But while sales have nearly doubled over the past five years, a closer look at hhgregg's performance reveals that sales at stores open more than one year (a key indicator of a retailer's overall health) have been posting declines. Like market leader Best Buy, hhgregg appears to be suffering from "showrooming," when shoppers view a product in its stores and then order it online for less from Amazon.com. The fickle US economy and stubborn high unemployment have reduced demand for big ticket items, especially TVs and appliances. (Video and appliances account for more than 75% of hhgregg's sales.)
In response to declining same-store sales, which are largely due to the poor performance of the video category, hhgregg has set three key initiative for fiscal 2014: evolving its sales mix, expanding its customer base, and enhancing its service offerings. To make up for the drop in TV sales, the company is looking to sell more appliances as the housing market in the US improves.
The investment firm Freeman Spogli & Co. owns 43% of the company's shares.