Troubled electronics retailer hhgregg Appliances Inc. is closing 40% of its 220 store locations and three distribution centers.
Hhgregg, No. 246 in the Internet Retailer 2016 Top 500 Guide, made the announcement Thursday, about a month and a half after reporting in its third quarter earnings release that losses had increased to $83.9 million through the first nine months of fiscal 2017 ended Dec. 31, compared to a $45.8 million loss during the same period a year ago. As part of the store closures, about 1,500 positions within the company will be eliminated. A company spokeswoman says the distribution center closings will have little impact on e-commerce.
Late last month Bloomberg reported, based on people familiar with the matter, that hhgregg is preparing to file for bankruptcy, likely in March. The retailer is still seeking an out-of-court solution that would allow it to stave off Chapter 11, according to a person cited by Bloomberg.
The company in mid-February said it was working with financial services firms Stifel, Nicolaus & Co. Inc. and Miller Buckfire & Co. to try and figure out a way to turn around the business.
“We feel strongly that the markets we will remain in are the right ones for our customers and our business model,” CEO Bob Riesbeck said Thursday in announcing the store and distribution center closings. “Our team is dedicated to moving forward and being a profitable 132 store, multiregional chain where we will continue to be a dominant force in appliances, electronics and home furnishings.”
The retail chain does not break out online sales in its quarterly earnings reports, however Riesbeck told analysts in January on hhgregg’s fiscal Q3 2017 earnings call that online sales were up about 16.5% year over year during the quarter. Overall sales in fiscal Q3 declined 23.7% year over year to $452.8 million, down from $593.2 million in the year-ago period.
Riesbeck also said in January the retailer’s sales decline was, in part, due to difficulties with a new distribution center. During fiscal Q3, hhgregg consolidated store distribution operations, moving them to a new facility near Cincinnati managed by a logistics provider from its own facilities in Indianapolis and Chicago.Favorite