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 firm sells name-brand products at more than 200 stores in about 15 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.
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.
hhgregg has been aggressively expanding its market reach. Indeed, in fiscal 2012 (ends March) the chain opened 35 new stores. All were in new markets, including Chicago, Miami, and Pittsburgh. To support its expansion the retailer opened new distribution centers in Illinois and Florida.
New store openings have fueled sales and income growth. In fiscal 2012 (ends March) hhgregg's net sales increased by 20% vs. 2011 and net income climbed 69% over the same period. Indeed, over the past four years sales have nearly doubled: from about $1.3 billion in fiscal 2008 to $2.5 billion in 2012. However, a closer look at the chain's performance reveals that sales at stores open more than one year (a key indicator of a retailer's overall health) have been declining. Indeed, same-store sales fell 1% in fiscal 2012 vs. 2011, after dropping 4%, 6.6%, and 8.3% in the previous three annual comparisons. Also, the chain has slashed its sales and earnings guidance for fiscal 2013, as it struggles to sell TVs. (Same-store sales in the video segment of the business tumbled nearly 17% in the first quarter of fiscal 2013.) 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, including appliances. (Video and appliances account for 80% of hhgregg's sales.)
Sensing opportunity, hhgregg adopted an accelerated growth strategy in the aftermath of the demise its rival Circuit City, which shuttered more than 700 stores in 2009. Indeed, over the past two years the chain has added more than 75 stores, many in new markets. In fiscal 2013 expects to continue to grow, albeit more slowly, with 20 to 22 new stores planned, most in St. Louis and Milwaukee. Long term, the company hopes to operate about 600 locations from coast to coast. Its rapid expansion coincides -- and is out of synch -- with weak consumer spending and a bleak outlook for consumer-electronics retailers. Indeed, many industry watchers are skeptical about the future of brick-and-mortar retailers, such as hhgregg and Best Buy, given their growing online competition. To compensate for falling TV sales, hhgregg has ramped up advertising to drive sales of appliances.
The investment firm Freeman Spogli & Co. owns 37% of the company's shares. – less