Appliance and electronics retailer hhgregg, Inc (HGG) has launched a Price Match Guarantee policy where the company guarantees its customers lowest prices on its products, available in its stores and online. Per the policy, the customers can match the prices of hhgregg products purchased with that of the competitors’ products of the same make and model within 30 days of purchase. The guarantee applies to local brick and mortar competitors as well as to major online retailers.
This Indianapolis-based retailer has always ensured best prices for its customers, but with this Price Match Guarantee policy, we believe that the company wants to gain customer confidence in its products and drive sales. In addition, hhgregg has been growing its appliances business with the introduction of new products in furniture and fitness equipments. The company is also expanding its computing and mobile phones category and focusing on initiatives to drive additional traffic and increase sales.
However, hhgregg’s video category is suffering from significant top-line pressure due to fundamental shifts and lower-than-expected margins across all screen sizes. In addition, declining industry demand for flat screen LCD televisions severely impacted overall store traffic and video category sales.
The sluggish video category sales also led to weak third quarter fiscal 2013 results reported on Jan 31. Adjusted earnings declined 13.3% year over year to 52 cents due to revenues and comparable store sales decline, especially in the video category and higher selling, general and administrative (SG&A) expense ratio. The weak third quarter results also led to the cut in earnings and sales guidance for fiscal 2013.
We believe that the industry-wide headwind in video category has overshadowed the company’s efforts to improve the overall mix of business. Moreover, we continue to expect sluggish performance in the video category over the near term. In such a scenario, we appreciate the company’s efforts to attract customers and offer lowest prices on its products in comparison to its competitors.
hhgregg holds a Zacks Rank #5 (Strong Sell). Stocks in the retail and wholesale sector worth considering include Green Mountain Coffee Roasters, Inc (GMCR), Aaron’s Inc (AAN) and Radioshack Corp (RSH), all of them holding a Zacks Rank #2 (Buy).Read the Full Research Report on HGG
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