From Home Furnishing Business
HH Gregg Loss More Than Doubles as Sales Fall 23.7%
Struggling retailer HH Gregg (NYSE: HGG) said its net loss more than doubled in the quarter ended Dec. 31 as sales fell 23.7% to $452.8 million.
The retailer, which sells electronics, appliances, furniture and bedding, attributed the loss to competitive pressures in low-margin categories such as electronics, and unexpected costs stemming from the consolidation of its two distribution centers.
The net loss or the quarter, the third quarter of the HH Gregg’s fiscal year, totaled $58.3 million or $2.10 per share. That was up from a loss of $26.9 million or 97 cents per share in the same quarter the previous fiscal year.
Comparable-stores sales tumbled 22.2% -- a figure driven by a 38.6% drop in comparable-store sales of consumer electronics.
"During the quarter, we were challenged by the competitive pressures in the market, specifically in consumer electronics as it is a larger mix of our business during the holidays,” said Robert Riesbeck, president and CEO. “Additionally, the consolidation of two existing distribution centers into one new distribution center had a temporary negative impact on our sales for the quarter, in the range of $20 to $25 million.”
He said the retailer is continuing to shift its product mix away from electronics and putting more emphasis on appliances and furniture.
In the most recent quarter, appliances accounted for 53% of sales, while electronics were 41%. The company said furniture and bedding, which it classifies as “home products,” accounted for just 6% of sales.
“Although we are disappointed with our overall performance during the quarter, we are pleased with our investments made to shift our focus to appliances and furniture, through resetting store layouts, adding Fine Lines departments and promotions focused on our successful appliance business,” said Riesbeck. “Going forward, we will continue our focus on our appliance and home products categories and will continue to reposition our consumer electronics business to focus on the premium models."
He said the HH Gregg’s new assortment of home products will be fully rolled out during the current quarter.
“Through these initiatives and additional expected cost reductions, we are committed to improving our results,” he added. “We are pleased with how we have managed our balance sheet to give us the liquidity position to drive these future results."
For the nine months ended Dec. 31, sales fell 12.5% to $1.33 billion. The nine-month net loss totaled $83.9 million or $3.02 per share. That compares with a loss of $45.8 million or $1.65 per share in the first nine months of the previous fiscal year.