The retail chain blames difficulties with a new distribution center as well as lagging consumer electronic sales for a nearly 24% total sales decline in the quarter.

A disappointing first nine months of fiscal 2017 could have been far worse for hhgregg Appliances Inc. if not for the success of the retailer’s online store.

The electronics and furniture retailer, No. 246 in the Internet Retailer 2016 Top 500 Guide, reported net sales of $452.8 million during the fiscal third quarter ended Dec. 31, down 23.7% from $593.2 million last year. Through the first nine months of fiscal 2017, hhgregg reported total sales of $1.33 billion, down 12.5% from $1.52 billion last year.

The retail chain does not break out online sales in its quarterly earnings reports, however CEO Bob Riesbeck told analysts on hhgregg’s Q3 2017 earnings call that online sales are up “at least 16.5%” for the first nine months of the year. That’s an acceleration from prior comparable nine-month period, where online sales grew 10.4%, according to a transcript of the retailer’s fiscal Q3 2016 earnings call from Seeking Alpha.

According to data from web traffic measurement firm SimilarWeb, traffic to grew to 8,550,000 visits during the November-December holiday shopping season. That’s up 8.6% from 7,871,000 visits during the same period in 2015.

Riesbeck blamed the overall sales declines on a couple of factors. During the quarter, the retailer consolidated store distribution operations from facilities in Indianapolis and Chicago to a new facility near Cincinnati managed by a logistics provider.


“During the quarter our new partner experienced significant issues with bringing in products to the facility and then delays in shipping out to our stores and our delivery centers,” Riesbeck told analysts on the call, according to a transcript from Seeking Alpha. “This added an approximately $20 million to $25 million impact to sales during the third quarter. These issues are being corrected and we expect this to be [a] one time [impact].”

Sagging sales of consumer electronics also factored in the sale decline. Hhgregg’s sales of consumer electronics dropped 38.6% on a comparable basis including e-commerce during the fiscal third quarter, and 29.6% year-to-date.  Some of the decline can be attributed to the retailer’s shift toward selling high-end electronics.

“Although our transition to focus on premium video and audio has impacted sales, we firmly believe focusing on our non-commodity products will complement the rest of our assortment,” he said.

Overall, consumer electronics accounted for 41% of the retailer’s sales during the quarter and 34% of its total sales through the first nine months of the year.

For the fiscal third quarter ended Dec. 31, hhgregg reported:

  • A comparable-store sales decline, including e-commerce, of 22.2%, compared with a 10.8% decline last year.
  • A net loss of $58.3 million, compared to a net loss of $26.9 million.

For the first nine months of fiscal 2016, hhgregg reported:

  • A comparable-store sales decline including e-commerce of 11.8%, compared with a 7.3% decline last year.
  • A net loss of $83.9 million, compared to a net loss of $45.8 million.