Indianapolis – hhgregg
will enter the Baltimore, Philadelphia and Washington markets next year as part
of a major expansion into the Mid-Atlantic states.
The chain plans to
open up to 45 stores and a distribution center to support the push into large
and midsized metropolitan markets there.
The company has
begun to execute leases for the new stores, with 18 locations already approved
by hhgregg’s board, and is currently exploring various financing alternatives,
including equity and debt, to fund the growth.
The expansion
represents a key leg in the company’s plans to become a second national CE and
appliance specialty chain, and to fill the void left by Circuit City.
President, COO and CEO-elect Dennis May made the company’s ambitions clear last
month at an investor conference when he noted, “Manufacturers are struggling
significantly with profitability and are extremely excited about us becoming a
national retailer like the Circuit City of 10 or 15 years ago.”
“We have an
extraordinary opportunity to gain market share by taking advantage of the
current rental rates and excess availability in the real estate market,” he
said in a statement released this morning. “The combination of our effective
operating model, an opportunistic real estate environment, strong partnerships
with key vendors, and the availability of talented field-level personnel create
a significant opportunity for the company to accelerate its growth while
continuing to provide customers with a superior customer purchase experience.”
Meanwhile, the
company has accelerated its growth plans for the current year, raising its goal
of 16 to 18 new stores to between 20 and 22 and targeting the new markets of
Richmond, Va. — the former hometown of Circuit City — as well as Memphis and
Tampa, Fla. The store openings will be funded from cash from operations and the
company’s revolving credit facility.
Capital
expenditures, net of sale and leaseback proceeds are expected to range between
$45 million and $50 million for the current fiscal year, up from previous
expectations of $30 million to $35 million. The increase primarily reflects the
incremental capital expenditures expected to be incurred this year for the
increased number of store openings expected in 2010, the company said.
