hhgregg: Weather Hurt Chain In Fiscal Q4

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INDIANAPOLIS – hhgregg’s sales and earnings slid during its fiscal fourth quarter amid extreme weather that impacted most of its stores.

The multiregional majap, CE and home-furnishings chain reported a net loss of $7.2 million for the three months, ended March 31, compared with a $9.9 million profit for the year-ago period, as net and comp sales both declined 9.9 percent.

The loss included $4 million in wireless inventory write-down as the company exits the postpaid business and the write-off of store fixtures as it changes its product mix. Earnings were further squeezed by higher costs and advertising expenses, the retailer said.

Comps include online sales and sales of stores in operation for at least 14 months, including those that were remodeled and relocated.

President/CEO Dennis May attributed the downturn to severe weather during most of the quarter that “negatively impacted traffic and operating performance in the majority of our stores.” He said the weather’s impact was compounded by continued volatility in CE.

On the product front, majaps was the only category to show growth during the period, albeit slight. White-goods comps edged up 0.5 percent, representing the 11th consecutive quarterly increase for the category, due to higher average selling prices (ASPs). Majaps now represent nearly half of the company’s sales mix.

Weakness in TV led to a 19 percent comp decline in CE, which now comprises 38 percent of the sales mix. TV unit volume fell by the double digits due to the chain’s strategy of offering fewer entry-level models and more largescreen displays, the retailer said.

Computing and wireless comps declined 22.6 percent on lower ASPs and diminished demand for computers and mobile phones, which was partially offset by “double-digit increased demand” for tablets. The category now represents 8 percent of the sales mix.

Comps within the home products category, which includes furniture, mattresses and fitness equipment, slipped 0.4 percent due to reduced demand for mattresses and a product transition within furniture.

For the full fiscal year, net income fell 99 percent to $200,000, net sales declined 5.5 percent to $2.3 billion, and comps decreased 7.3 percent.

Going forward, May said the company is looking to “transform” the business through a number of strategic initiatives, including a redefined sales mix; enhanced and differentiated customer experience; expanded e-commerce capabilities; and new customer-facing technologies.

“We believe our responsibility is to inspire and delight our customers with a truly differentiated purchase experience to help bring their homes to life,” he said. “In doing so, we will improve our financial and operating results, and will solidify our brand relevance within the marketplace.”

Interim chief financial officer Andrew Giesler added that the company remains debt-free, maintains a strong liquidity position, spent the past year investing in its infrastructure, and will only open a minimal number of new stores this year as it focuses instead on transforming its business model.

The retailer, which operates 228 brick-and-mortar stores in 20 states, envisions building a nationwide chain of 400 stores.

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