h.h.gregg Holiday Sales StallIndianapolis – h.h.gregg said its decision to stay above the promotional fray during the holiday season hurt sales. 1/06/2014 09:16:00 AM Eastern
Indianapolis – h.h.gregg said its decision to stay above the promotional fray during the holiday season hurt sales.
According to preliminary estimates, net sales fell 11.6 percent to $707.1 million, and comp sales decreased 11.2 percent, for the third fiscal quarter ended Dec. 31, 2013.
The chain’s computing and wireless category took the biggest hit, with comps falling about 24.5 percent, while its CE business, largely comprised of TV, decreased approximately 20 percent.
In a statement, president/CEO Dennis May said, “Our holiday sales were significantly impacted by increased promotional offerings of televisions and tablet products across a variety of retail formats. While we are disappointed with these sales results, we made the strategic decision during the quarter not to fully participate in the heavily promotional environment.”
In a research note, Janney Montgomery Scott retail analyst David Strasser said h.h.gregg’s sales miss during an otherwise strong quarter for CE was also attributable to “the wrong product mix for this holiday season,” pointing to the chain’s limited offering of tablets, phones, video games and small-screen TVs.
Conversely, the retailer’s majap comps rose about 1.5 percent, while its expanding home products category, which includes mattresses, furniture and exercise equipment, saw a 36.1 percent increase in comps.
The results, May said, confirmed the company’s decision “to continue to transform our business towards a broader assortment of home products, including appliances and home furnishings … We plan to continue to implement initiatives to drive profitable sales and customer traffic in these and other newer categories. Management remains committed to transforming the company's sales mix and broadening its reach to both new and existing customers.”
May added that despite the softness in CE, the chain managed its inventory and liquidity position well, with total inventory per store below 2012 levels. But while h.h.gregg remained “solidly profitable” in the third quarter, he warned that the weak third-quarter sales will impact full-year earnings result -- which are scheduled to be announced Jan. 30.