Following the release of rather dour fourth-quarter results, hhgregg’s chief financial officer and interim CEO Robert Riesbeck filled in analysts on what he’s doing to right the ship.
Clearly taking the reins and sounding like a plausible successor to prior CEO Dennis May, Riesbeck described a stabilizing situation in which fourth-quarter losses were narrowed to $9 million vs. last year’s $25 million, and net and comp sale declines were limited to the high single digits for the four months ended March 31.
Here’s how he broke it down:
CE: Category comps fell 20 percent last quarter, but Riesbeck attributed more than 75 percent of the decline to a late TV-model transition by vendors, which carried a $25 million impact.
“I still think 4K is the shining star,” he said, and hhgregg will continue to focus on premium large-screen TVs from Samsung, LG and Sony to maintain the highest possible average selling prices.
To further goose that business, the company will begin offering free TV delivery in April, expand its online assortment, and lean on its extended-financing offers.
Appliances: The category now accounts for 56 percent of the sales mix, and enjoyed a 5 percent compsales bump in February and March with the launch of a free-delivery program. Also fueling the gains were leadership changes made last year within the majap merchandising team, and an expansion of its bundled kitchen-suite offers.
Riesbeck plans to keep the majap momentum going by adding up to 15 Fine Lines premium appliance departments by next March, doubling the current count, and by maintaining compelling extended finance offers.
Furniture: The company’s fastest-growing category was buoyed by a new showroom layout that moves the products to the front of the store. Forty locations were remodeled thus far, and 100 more are scheduled for resets by next March. Riesbeck is also stepping up add spend on furniture and will offer aggressive 48- and 60-month 0 percent financing programs.
E-commerce: Online sales grew 20 percent in the fourth quarter and 13 percent for the year. Riesbeck believes recent investments in the company’s IT platform, m-commerce capabilities and expanded TV assortment can drive upward of 25 percent sales growth for the current fiscal year.
Store traffic: Traffic drivers include the furniture resets, more impactful marketing, better customer service and price competitiveness. The latter is embodied by the Ultimate Price Center, an Internet-connected in-store kiosk that allows sales associates to confirm competitors’ prices with customers, and provide access to the retailer’s vaster online assortment.
New stores: The company is currently evaluating whether and where to open — or close — locations.
New CEO: Riesbeck, who joined hhgregg in 2014 from equity investment firm Sun Capital Partners, said he’s hoping the board will consider him for the permanent post after his six-month interim role is up in August.
Cost savings: The company saved $67 million last year by trimming corporate overhead, cutting employee salaries and benefits, and spending its ad dollars more efficiently (read: digital).
This year the chain will focus on making its logistics and supply chain more efficient, a move that could realize upward of $25 million in annualized savings by 2018, Riesbeck said.
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