hhgregg Hires New COO - Analyst Blog

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hhgregg Inc. ( HGG ) 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 Radioshack Corp. ( RSH ) 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 Target Corp. ( TGT ) 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 traffic.

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 quarter.

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 (Sell).

Another better-ranked consumer electronics retailer is Aaron's Inc. ( AAN ), which holds a Zacks Rank #1 (Strong Buy).



AARONS INC (AAN): Free Stock Analysis Report

HHGREGG INC (HGG): Free Stock Analysis Report

RADIOSHACK CORP (RSH): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: COO , AAN , HGG , RSH , TGT

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