Appliance and electronic retailer
) has re-opened its store at Southlake Mall in Morrow, Ga. after
completing its renovation. The store had been damaged by the
March hailstorm. The store has re-opened just ahead of the huge
Memorial Day sale at the Southlake Community, which should be
beneficial for the company. In order to attract customers,
hhgregg is offering up to 25% off on appliances, TVs, furniture,
and other products. Additionally, customers can get up to 24
months financing on total purchases done till Jun 1, 2013.
The company expects this store reopening to drive sales. In
fact, hhgregg has been growing its appliances business with the
introduction of new products in furniture and fitness categories.
The company is also expanding its computing and mobile phones
category and focusing on initiatives to drive additional traffic
and increase sales.
However, hhgregg's video category is suffering from
significant top-line pressure due to fundamental shifts and
lower-than-expected margins across all screen sizes. In addition,
declining industry demand for flat screen LCD televisions
severely impacted overall store traffic and video category
The sluggish video category sales also led to weak fourth
quarter fiscal 2013 results reported on May 20. Earnings of 31
cents per share declined 20.5% from the prior-year quarter's
adjusted earnings. However, it beat the Zacks Consensus Estimate
by a penny. Decline in revenues and comparable store sales,
especially in the video category, gross margin shortfall and
higher advertising expense ratio led to the year-over-year
decline in earnings. The decline also partially offset the
benefit from addition of new stores.
We believe that the industry-wide headwind in video category
has overshadowed the company's efforts to improve the overall mix
of business. Moreover, we continue to expect sluggish performance
in the video category over the near term. In such a scenario, we
appreciate the company's efforts to attract customers through
store openings and discounts on its products in comparison to its
competitors. hhgregg holds a Zacks Rank #3 (Hold), while another
) carries a Zacks Rank #1 (Strong Buy).
Other retail and wholesale stocks that are performing well
Green Mountain Coffee Roasters, Inc.
The TJX Companies, Inc
). While Green Mountain holds a Zacks Rank #1 (Strong Buy), TJX
carries a Zacks Rank #2 (Buy).
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