HHGregg throws in the towel, will close all 220 stores
HHGregg on Friday announced that the United States Bankruptcy Court for the Southern District of Indiana approved its plan to liquidate its assets, an effort that is now underway.
The bankrupt electronics retailer will shutter all 220 stores in 19 states by the end of May, resulting in the loss of some 5,000 jobs, according to The Indianapolis Star. HHGregg already had an agreement in place with Tiger Capital Group, LLC and Great American Group, LLC to sell merchandise as well as furnishings, trade fixtures, equipment and improvements to real property at the retail stores and distribution centers to be liquidated.
HHGregg filed for bankruptcy March 6 and a plan to exit bankruptcy as a going concern fell through later that month. An unnamed bidder had emerged that would have allowed the retailer to exit the process a going concern, but the deal fell through amid objections over the plan to pay creditors.
HHGregg's troubles are particularly pronounced, even in a troubled area of retail. The company closed 88 stores (some 40% of its fleet) and laid off some 1,500 employees in a cost-cutting measure days ahead of its Chapter 11 filing, and in its most recent quarter, sales plummeted to about $453 million, down 24% compared to the year-ago quarter. In all, HHGregg's stock value declined more than 60% over the last year, and the New York Stock Exchange recently warned the company could be delisted for failing to meet the minimum listing price requirement.
Home electronics has been a tough space for many players, not only because a few high-priced categories like smartphones have now become saturated, but also because many have also evolved into commodities — items that can be found at a range of retailers — forcing those merchants to compete on price. Even Best Buy, which enjoys fruitful store-within-store concessions relationships with several retail partners and a successful omnichannel approach, is struggling as Amazon takes significant market share.
Amazon accounted for a whopping 90% of the $5.6 billion growth in consumer electronics sales posted nationwide in 2015, according to a note from Deutsche Bank analysts last year. Five years ago, Amazon had 6.2% share and ranked No. 4 on the list of top 100 U.S. electronics retailers; today, it's No. 2 with 17.0% share, jumping ahead of Wal-Mart. Online retailers, mass merchants and warehouse clubs have also reshaped the economics behind the consumer electronics retail category, making a turnaround for HHGregg more challenging, Morningstar equity analyst RJ Hottovy said last month in a note emailed to Retail Dive.
Against this backdrop, HHGregg struggled to find a path forward, to no avail. In his statement last week, CEO Bob Riesbeck indicated the company ran out of time. “While we had discussions with more than 50 private equity firms, strategic buyers, and other investors, unfortunately, we were unsuccessful in our plan to secure a viable buyer of the business on a going-concern basis within the expedited timeline set by our creditors,” Riesbeck said.
- press release via BusinessWire hhgregg to Liquidate Assets
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