Hhgreg, the appliance retailer is planning on permanently closing 88 of its Stores due to low/no profits. Hhgregg will also be closing at least three of its distribution centers including one in Brandywine, MD. The goal behind closing so many stores and laying off so many employees is to stay afloat and potentially avoid bankruptcy. The company’s holidays sales were incredibly low and the company actually lost more than it has made in the past couple of years. It appears as though the retailer could not keep up with other larger companies such as Best Buy.
Competition to stiff
HHGreg specializes in selling TVs, gaming systems, and home appliances such as ovens. The retailer sells very similar items as many other stores, but HHGregg does not have as wide of a selection as stores like Walmart, or as high end of a selection as stores like Best Buy, both of which are HHGregg’s direct competition. People may go into a place like Walmart for groceries and end up leaving with a TV, but for a store like HHGregg, they need to get people in the door for the exact products they need to sell. The company has seemingly failed at getting customers in the door and turning a profit or even breaking even. However, the retailer has a plan to avoid bankruptcy and turn the business around.
Plans for the future
HHGregg still has hope for the future, even though they are no longer able to sell public shares of their company on the New York Stock Exchange. The company is choosing to close almost half their stores, but not all stores are equally poor-performing. As some are profitable and some aren’t, the company is divesting only the poorest performing stores and they are hoping to again start turning a profit by doing so.
The company has even hired Stifel, Nicolaus & Co. and Miller Buckfire & Co, companies that give financial guidance and help make monetary decisions.
The company hopes to continue becoming a high-end retailer like the company tried to do just a few months back. HHGregg is hopeful that a smaller number of profitable stores in better locations will begin to help them correct the course of their company.
However, the goals for the company’s future will affect some of its current employees quite negatively. 1,500 people are being let go from their jobs because of this closing. However, if HHGregg can truly fix the predicament they are in, they will be able to hire much more than 1,500 more people in the future.
