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hhgregg Plans New In-Store, Online Strategies

Indianapolis, Ind. – hhgregg
announced a series of in-store, online and marketing initiatives to further
drive sales and share.

The plans include a
renewed focus on major appliances; a change in store-level management
structure; a redesigned e-commerce site and smaller brick-and-mortar stores; a
more a tailored TV assortment and expanded IT selection; and a new marketing
campaign built around The Beatles’ song “Help!”

In appliances, the
175-store chain sees “a significant opportunity to grow share,” president/CEO
Dennis May told analysts today during a fourth-quarter earnings call, and promised
to become “more aggressive” in the category. Among the changes: splitting the
role of store sales manager into two positions, with one dedicated to CE and
the other to white-goods and furniture.

The company is also
launching a white-glove installation service for majaps, will keep more
inventory within the stores to accommodate take-with purchases, and will commit
more marketing funds to the category.

The new website,
developed with interactive marketing agency Rosetta using IBM WebSphere
software, will launch this fall with enhanced functionality. New features
include in-store pick-up and ship-from-store fulfillment options, as well as
enhanced product selection and knowledge base.

May said the concept is
to match the online experience with the sales-assisted in-store experience, and
to adapt the business to changes in consumer shopping habits. To that end, the
chain is also launching a sister mobile-commerce site.

At the same time, the
chain is moving to a smaller, 25,000-square-foot brick-and-mortar format,
compared to its typical 30,000-square-foot boxes. He said the new size is more
in line with real estate opportunities going forward, and can be realized
without any significant SKU reduction due to the thinner nature of TVs.

In TV, the company will concentrate
on larger screen sizes, with a focus on 3D and smart models, and will edit its
assortment accordingly. Nevertheless, May said the availability of 3D and
connected features in mid-sized displays will help buoy average selling prices
this year, and could help offset pricing pressure on entry-level models.

hhgregg will also place a
greater emphasis on IT, with an expanded assortment of laptops and tablets and
continued investment in computer support services. May said the category’s
lower gross margins are more than offset by increased traffic, warranty and
service attachments, and the lower cost of IT transactions, compared with
shipping and warehousing major appliances and large-screen TVs.

Elsewhere, the John
Lennon tune “Help!” was licensed for a new print, TV, online and in-store
marketing campaign called “We Help,” which emphasizes the retailer’s
knowledgeable sales assistance.

For the current fiscal
year, the company said it will open 35 to 40 new stores, with the majority in
Chicago, Miami and Pittsburgh, and is projecting net sales increases of 15
percent to 20 percent, and comp store sales of negative 3 percent to flat.

Said CFO Jeremy Aguilar, “As
we progress through the fiscal year and move beyond the anniversary of the
appliance stimulus program, we expect to face more favorable comparable store
sales comparisons in the second half of the fiscal year. While we expect the
video industry to continue to face challenges in fiscal 2012, we believe the
video comparisons are more favorable in the second half of the fiscal year.

“In addition,” he
continued, “we believe our new stores that opened in fiscal 2011, along with an
anticipated improvement in appliance sales trends, will partially offset the
negative comparable store sales impact from the video category, thus we expect
to drive improved comparable store sales results in the second half of the
fiscal year.”