Bankrupt electronics retailer HHGregg will proceed with liquidation of its business if it doesn’t attract a buyer within the week, according to a March 29 filing with the Securities and Exchange Commission. A request for comment or further details from Retail Dive to HHGregg was not immediately returned.
Tiger Capital Group, LLC and Great American Group, LLC have agreed to sell merchandise at remaining HHGregg retail stores and distribution centers as well as furnishings, trade fixtures, equipment and improvements to real property at those locations, according to the filing.
HHGregg seemed to have a plan to exit bankruptcy (for which it filed in early March) with renewed chances and little debt. But an agreement with an unnamed bidder (thought to be its own ad agency) fell through later last month when another vendor, Haier US Appliance Solutions, objected to dedicating $6 million of the $8 million being set aside to pay creditors.
Last month, when a deal with its unnamed suitor was announced, CEO Robert J. Riesbeck said the retailer was poised “to come out of this debt-free and more agile.” But with the plans dashed, HHGregg must move forward in its Chapter 11 process without a stalking horse bid to set the stage for a bankruptcy auction. The company said it will continue to operate in the ordinary course of business throughout the restructuring process, though that takes into account the closure of 88 stores, representing some 40% of its fleet.
Interest in HHGregg's assets remains, says Riesbeck, although it has yet to materialize into a deal that would allow the company to execute a turnaround without piling up debt. Home electronics has been a tough space for many players because many devices have evolved into commodities — items that can be found at a range of retailers — which has forced 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.
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, Inc. equity analyst RJ Hottovy said in a note emailed to Retail Dive earlier this month.
HHGregg's troubles are particularly pronounced in the space. The company closed stores and laid off some 1,500 employees in a cost-cutting measure days ahead of this Chapter 11 filing, and in its most recent quarter, sales plummeted to about $453 million, down 24% compared to the year-ago quarter. The company's stock value has declined more than 60% over the last year, and earlier this month, the New York Stock Exchange warned the company could be delisted for failing to meet the minimum listing price requirement.