H.h. gregg Eyes Ad, Product Mix Shifts Following $25 Million Quarterly Loss
Following “challenging” fiscal Q4 results in which it posted lower comparable store sales in all categories, h.h. gregg is shifting advertising from print to digital, cutting operating expenses and working with an outside consultant to undertake a “complete and thorough…
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review of our supply chain,” CEO Dennis May said on a Friday earnings call. May called out a supply chain hit due to last winter’s port strike. H.h. gregg’s net loss widened in Q4 to $25.2 million, versus $7.2 million for the prior-year period, with comparable store sales down 10 percent over the year-ago quarter. Revenue dropped to $486 million for the quarter, from $538 million a year ago. The retailer plans to apply more ad dollars to “appliance messaging,” including TV commercials fully centered on appliances, May said. In video, 4K Ultra HD represents 30 percent of h.h. gregg’s video mix, May said, and he expects the stake to increase to 50 percent by the holiday season. May cited “better trends” in TVs for this calendar year, with unit sales jumping from 1 million to 4 million units. CE sales were down 10.9 percent while furniture and mattress sales -- one of the retailer’s attempts to diversify from CE -- were down 4.7 percent, it said. Tablet sales plummeted 30 percent, a category Janney Capital Markets analyst David Strasser characterized as having a “tough innovation cycle.” May discussed an expansion into laptops as the company looks to “reset” departments and “right-size” inventory. “We have continued to underperform the industry in this category,” he said, “largely due to how we over-index the market in our mix of tablets versus laptops." In a research note, Strasser expressed doubt about the strategy since Apple has nine of the top 12 selling SKUs in the laptop market, and h.h. gregg isn’t an Apple dealer. The retailer closed two stores at the end of their leases in the quarter, and May indicated more could be on the way. "Any good retailer is looking at their portfolio of real estate and trying to understand dot-com growth and the number of locations that make the most sense to have in a market," he said. May said he didn't expect "significant" store closings across the chain.