) is leaving no stone unturned to revive its struggling business.
Initiatives such as product innovation, focus on developing
brands and exit from underperforming businesses are some of the
measures being taken to boost sales. Most recently, this
appliance and electronics retailer hired Troy H. Risch as its new
Chief Operating Officer (COO), whose experience is expected to
help the company execute its initiatives.
With 25 years of experience in the retail industry and
in-depth knowledge of general management, sales and marketing,
real estate and operations, Risch was one of the strong
contenders for the position. Currently, he works as executive
vice president of store operations at
) and served as a member of the executive committee team. He was
also responsible for managing 4,400 stores.
Prior to this, Risch also held a leadership position in
) and was in charge of the operations of over 1,750 stores. Risch
will assume his new role at hhgregg on May 5.
hhgregg has been posting disappointing results in the consumer
electronics category since the last few quarters due to
lower-than-expected margins and declining industry demand for
flat screen televisions. Weak promotional activities are also
adding to the woes. In addition, lack of innovation in
televisions has been severely impacting overall store
Lately, the company has witnessed sluggish same-store sales in
the computing and wireless category in all the three quarters of
fiscal 2014. The weak comps can be attributed to a decrease in
demand for laptop computers and lower average selling price for
tablets. The category has been facing comp sales decline due to
an underperforming contract-based mobile phone business, which
the company decided to exit during the fourth quarter. The
company's home products category also showed signs of weakness
during the third quarter.
Adding to the woes, hhgregg also delivered weak preliminary
results for the fourth quarter of fiscal 2014 (scheduled to be
reported on May 20) and lowered its expectations for fiscal 2014.
For the fourth quarter, the company expects net sales to decline
approximately 9.9% year over year, with a decline of
approximately 9.9% in comparable store sales.
The poor comparable sales performance is largely attributable
to the consumer electronic, computing and wireless and home
products categories. Further, hhgregg expects losses in the
fourth quarter, as against prior year's adjusted net income. This
could be due to the underperforming contract-based mobile phone
business, which the company has decided to exit during the fourth
Following weaker-than-expected fourth quarter expectations,
the company lowered its fiscal 2014 expectations for sales and
earnings. hhgregg expects net sales to decline approximately 6.9%
from fiscal 2013 levels, worse than a decline of 4.0-5.5% guided
previously. The company expects adjusted earnings in fiscal 2014
to be 9 cents per share, much lower than the previous guidance
range of 30-40 cents per share.
The company has employed different initiatives to revive its
business. Though it is focusing on its appliance category and not
relying much on consumer electronics and computing and wireless
categories, we still remain bearish until we see substantial
improvement in these categories. hhgregg holds a Zacks Rank #4
Another better-ranked consumer electronics retailer is
), which holds a Zacks Rank #1 (Strong Buy).
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