New York — hhgregg’s leadership team outlined its plan to become a national electronics and appliance chain during an investor conference here yesterday.
Chairman/CEO Jerry Throgmartin and president/COO Dennis May told analysts at a Piper Jaffray presentation
that suppliers, investors and consumers would welcome another national specialty chain, albeit one that sells a more profitable mix of premium products through a highly-trained sales force that can properly explain them.
“Expansion in the CE business has been in lower margin self-serve and low-serve retail,” said May, who succeeds Throgmartin as CEO in August. “Manufacturers are struggling significantly with profitability, and they are extremely excited about us becoming a national retailer like the Circuit City of 10 or 15 years ago.”
To get there, the chain will follow its spoke-and-wheel strategy of establishing distribution centers in key regional markets that can serve satellite stores within a five- to nine-hour drive. The company successfully employed that approach in Indianapolis, Atlanta and Florida, May told TWICE, as it grew from 35 to 111 stores over the past eight years.
This year it plans to open upwards of 18 new locations, focusing on the coastal Carolinas and the new markets of Tampa, Fla., and Memphis, Tenn., May said.
But the retailer will “ramp our growth rate up dramatically” in 2010, Throgmartin projected, as it takes advantage of plentiful real estate, a talented labor pool and the marketplace vacuum left by Circuit City.
“Once in awhile you get a window of opportunity that you have to take advantage of because you don’t know how many more will come along,” Throgmartin noted.
The company had another such window in 1999 when it nearly doubled in size by adding 14 former Sun TV & Appliance stores, he said. May joined hhgregg from Sun TV as part of the acquisition of the store leases.
The chain is presently analyzing multiple markets in which to make its next move, May told TWICE. May wouldn’t identify the regions under consideration, but said they needn’t be contiguous with the company’s current trading areas.
hhgregg ultimately plans to operate more than 400 stores across the country, although there is no time frame for the build-out and the optimal store count is still being scrutinized. “We can pick and choose where we go next,” May said. “There’s a tremendous opportunity to take our model across the United States.”
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