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Losses Steepen At hhgregg

It was a rough quarter for hhgregg.

The 220-store appliance, CE and home-furnishing chain reported a net loss of $18.4 million in its second fiscal quarter, ended Sept. 30, compared with a prior-year net loss of $10.1 million.

The losses came as recently installed CEO Bob Riesbeck built a new management team and began putting his turnaround strategy in place.

Contributing to the red ink was a 6.6 percent decrease in net sales, to $454.5 million, and a 6.4 percent drop in comp-store sales, compared with 3.5 percent comp decline last year.

CE took the biggest hit, with comps falling 25.1 percent, while comp sales of furniture and mattresses were essentially flat, edging up 0.7 percent.

Only appliances showed growth: Majap comps gained 5.7 percent, to now comprise 63 percent of the company’s sales mix, up 7 percentage points from last year.

Driving the white-goods gains were declines in average selling prices (ASPs), which resulted in greater unit sales volume.

Conversely, ASPs rose for CE and home furnishing, which led to unit volume declines.

Also pressuring the bottom line were higher costs related to the company’s new free-delivery service; higher utility bills; and investments in a logistics optimization project.

The company also took a $1.4 million non-cash asset impairment charge based on lower projected cash flows and declining profitability at 22 stores, and  closed all five Wisconsin stores during the quarter.

In a statement, Riesbeck pointed to continued growth in appliances and furniture, stable gross margins, a debt-free balance sheet, “solid growth” online and rising customer satisfaction scores.

“We continued to implement our strategic plan and to position hhgregg as the best option to purchase appliances, furniture and premium consumer electronics,” he said. “We are energized by the upcoming holiday season as we look to maintain our steady progress.”

The Indianapolis-based company, founded in 1955 by Henry Harold “Hine” Gregg, went public in 2007 to help fuel its national ambitions. It currently operates 220 stores across 19 states.