Electronics/Appliances Retailer Files Chapter 11; Finds Buyer

Compiled by Ray Young (RPM) and John Kelly (Daily Clips)

Wednesday March 8, 2017

Electronics/Appliances Retailer Files Chapter 11; Finds Buyer

Indianapolis-based Hhgregg has filed for bankruptcy.

The move came just days after the struggling chain announced a big wave of store closings.

In a statement, Hhgregg said it has reached an agreement with an anonymous party to purchase its assets, which will allow the company to exit Chapter 11 debt free "with significant improvement in liquidity for the future stability of the business." Terms of the agreement were not disclosed.

"We've given it a valiant effort over the past 12 months," said Robert J. Riesbeck, Hhgregg's president and CEO. "We have conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path forward to ensure Hhgregg's long-term success."

The retailer's remaining 132 store locations will operate in the ordinary course of business throughout the restructuring process. The 88 stores slated for closing will wind down operations by mid-April, under the previously disclosed plan.

Hhgregg, which expects to emerge from Chapter 11 in approximately 60 days, said it remains "fully committed" to its 132 remaining stores.

"We have solidified our senior management team and everyone is dedicated to restructuring our business model for future profitability and growth," continued Riesbeck. "Through these strategic steps, we plan to come out of this debt free and more agile as we serve our valued customers and vendor partners, and continue to be a dominant force in appliances, electronics and home furnishings."

The retailer has obtained a committed $80 million debtor-in-possession financing.

Hhgregg has been losing money for the past two years. It reported a 22.2% drop in same-store sales for its most recent quarter.



Report: Midwestern Retailer to File Chapter 11

A value-oriented regional department store chain could be the latest retail casualty.

Gordmans Stores Inc. is preparing to file for bankruptcy, Bloomberg reported, saying the filing could occur as soon as this month.

Founded in 1915, the Omaha-based retailer operates 106 stores in 22 states.

Gordmans has racked up losses in five of the last six quarters. At the end of January, the company announced a workforce "consolidation" and streamlining to better compete in the "sluggish retail environment."



RadioShack Looks Like It's Going Bankrupt Again

The parent company of troubled electronics retailer RadioShack look set to file for Chapter 11 bankruptcy protection for the second time as soon as Tuesday as it looks to unload even more stores.

The parent, General Wireless Operations, has already begun closing 200 stores, the Wall Street Journal reported citing sources, and the company is negotiating with Sprint and others about shuttering more. A spokesman for General Wireless could not immediately be reached.

When RadioShack, based in Fort Worth, Texas, first sought bankruptcy in February 2015, it sold some 2,400 of its U.S. stores to General Wireless, an affiliate of Standard General, which is a hedge fund that led a rescue loan for the retailer the year before. General Wireless has since set up "stores within stores" at 1,750 of those locations for Sprint where the wireless network operator sells its service and smartphones.

According to the Journal, RadioShack's current management is betting the retailer can be viable long term as a smaller chain. As recently as 2013, there were 5,000 or so RadioShack stores in the U.S. Ninety-seven-year-old RadioShack had been the preeminent electronics chain for decades, selling CB radios and cables and connectors, but the store had trouble finding its niche in the smartphone era.

The liquidation of Circuit City Stores in 2009 was expected to give other electronics retailers some breathing room, but kept eating away at their market share. Best Buy (BBY, +1.46%) has found its way through the wreckage and stabilized its business, but hhgregg, a smaller furniture and electronics chain, filed for bankruptcy on Monday and said it would close one third of its stores.Electronics were also a weak category during the holiday season in the absence of a hot new smartphone or gadget: Target (TGT, -1.46%) said comparable sales of the items fell sharply during the period, while Best Buy reported a decline in U.S. comparable sales.



Dick's Sporting Goods Details Expansion; Tops Q4 Earnings, Sales

The struggles -- and exits -- of former rivals has proved a boon for Dick's Sporting Goods, which reported fourth quarter sales and earnings on Tuesday that beat the Street.

The company also announced aggressive store expansion plans.

In 2017, Dick's plans to open approximately 43 Dick's Sporting Goods stores, and relocate approximately seven stores. It also expects to open approximately nine Golf Galaxy stores and eight Field & Stream stores this year, largely adjacent to new or relocated Dick's stores. (The openings include former Sports Authority and Golfsmith locations that the company plans to convert to Dick's and Golf Galaxy stores.)

For the quarter ended January 28, Dick's reported net income of $90.2 million, or $0.81 per diluted share, down from $129 million, or $1.13 per share, in the year-ago period. During the quarter, the company incurred pre-tax charges totaling $93 million, which included a $46 million to write-down the value of inventory that does not fit within its new merchandising strategy, and $47 million related to its acquisitions of former Sports Authority and Golfsmith stores.

Net sales for quarter increased 10.9% to approximately $2.48 billion, in line with expectations.

Same-store sales increased 5.0%. Same store sales for Dick's namesake brand increased 5.3%, while Golf Galaxy increased 13.2%.

Online accounted for 17.9% of total net sales in the quarter, compared to 15.7% in the year-ago period. For the year, ecommerce was 11.9% of total net sales, compared to 10.3% for the previous year.

"We are very pleased with our strong fourth quarter results, as we delivered a 17% increase in non-GAAP earnings per diluted share driven by strong comp sales and gross margin expansion," said Edward W. Stack, chairman and CEO. "We realized meaningful market share gains and saw growth across each of our three primary categories of hardlines, apparel and footwear. In 2016, we capitalized on opportunities in the marketplace, and further solidified our leadership position by enhancing the shopping experience in our stores, building brand equity and successfully relaunching our e-commerce business on our own web platform."

In 2017, Dick's will implement a new merchandising strategy to rationalize its vendor base and optimize its assortment to deliver a more refined offering for our customers

Stack continued, "In 2017, we will continue to be aggressive and evolve our business. We will implement a new merchandising strategy. "We are in the process of reviewing our entire vendor base, which will be segmented into strategic partners and transactional vendors, with tertiary vendors being eliminated," Stackhouse said. "This strategy, combined with our efforts to enhance our digital capabilities, will enable us to stay ahead of consumer trends and differentiate us from the competition."

Analyst Neil Saunders, managing director of GlobalData Retail, was encouraged by Dick's vendor rationalization plans.

"In our view this is a sensible step, not least because although Dick's offering is comprehensive, it can also come across as a little jumbled and undisciplined," Saunders commented. "Some pruning should remedy this, and we believe it will reduce costs as well as deepening relationships with strategic partners which will allow it to create differentiated products. The latter will be important as Dick's starts to compete more with branded specialists like Under Armour.

As of January 28, 2017, Dick's operated 676 Dick's Sporting Goods stores, 91 golf specialty stores and 27 Field & Stream stores.



Fry's Electronics: How this Tech Retailer has Survived the Fall of Brick-and-Mortar

Before (AMZN), there was Fry's Electronics.

The 32-year-old retailer, which peddles electronics at 34 stores in the US, remains a quaint holdout in an era when ecommerce rules and orders can arrive in hours by drone.

Fry's locations, mostly in California, lack the gorgeous austerity of an Apple (AAPL) store. Its website is a straightforward grid of product ads filled with what appears to be old-school Microsoft Word clip art.

Yet Fry's has succeeded where now-defunct competitors like Circuit City and CompUSA have failed. Just this week, electronics retailer hhgregg filed for bankruptcy amid declining sales.

But, unlike hhgregg, Fry's serves up a deep inventory of tech products that goes beyond mass-market items. Sure, Fry's sells HDTVs and digital cameras, but it also caters to the hardcore tech hobbyist who wants to pick and choose the parts to build an entire personal computer down to that seventh-generation Intel Core i5-7500 processor.

Fry's has what Best Buy doesn't

"Best Buy only sells a small selection of expensive goods that are mostly low-grade," says TJ Pallas, a 30-year-old hardware developer and tech producer who splits his time between Chicago and Dallas and often travels for work. "Fry's is real electronics. I can build new things from parts from Fry's. If I'm working on site, I usually need something way sooner than a truck can get it."

Sure, Pallas could shop on Amazon. But for the specialized hardware he's looking for, he's skeptical about shopping online.

"There's also something to be said for holding and looking at a thing before it gets integrated into a system. If we order the wrong thing off Amazon, we could be hosed. `Go to Fry's and get exactly this and get back here,' is pretty bulletproof," he said.

Yahoo Finance spoke to several shoppers in the San Francisco Bay Area who were drawn to the chain's quirky store designs, each of which sports a different theme. The San Jose location, for example, is loosely modeled after a Mayan temple, replete with corridors and arches inside. The Palo Alto store channels the Wild Wild West with spoked wagon wheels, faux railroad tracks and a restaurant inside called the Iron Tail Caf?.

"It's more playful," explained Patrick Chung, a Palo Alto?based venture capitalist who loves the "cowboy" vibe of his local Fry's. "It feels like a mom-and-pop, not a corporate conglomerate."

Lauren Hockenson, a social media manager at a San Francisco LGBTQ bar, shops at Fry's not only for that playful vibe, but also for its deep-pocket discounts. "It's an experience, and they actually do a really good job honoring discounts," she said. "That's how I saved so much money buying headphones: Amazon had a daily deal, and I got my headphones for $60 off the price at Fry's. Pretty awesome."

Hockenson and her boyfriend Jordan, a writer for the tech site VentureBeat, also purchased all the parts they needed last year to build a custom personal computer swift enough to work with the Oculus Rift virtual reality headset.

A survivor in the age of Amazon

Surprisingly, Fry's Electronics continues to perform well in the age of Amazon. The brick-and-mortar chain, which did not respond to Yahoo Finance's request for comment, reported $2.15 billion for its fiscal 2015 revenues.



SMI: TV and OOH Take Dollars from Digital

Standard Media Index (SMI), today unveiled updated figures for January 2017. SMI total market closed saleschart2January 2017 with +5 percent increase on a year-on-year basis. Spend for the month was the highest volume of spend recorded for a January since SMI started tracking spend in 2009, highlighting that the ad market continues to be quite healthy.

Digital Ad Spend Continues to See Growth Slow

For the second month in a row, advertising spend on digital platforms only saw single digit growth compared to the same time period in 2016. The +6.3 percent increase is in stark comparison to the 15-20 percent growth rates the industry had become accustomed to at the beginning of 2016. SMI began seeing this trend toward the end of last year, and based on January spend, it's clear that the industry is in the middle of another shift ? this time back to more traditional advertising.

Out-Of-Home Transformation Drives Up Revenue

Digital's slower than expected growth is compounded by a resurgence in out-of-home advertising which saw +9.7 percent growth in January 2017 fueled by +43 percent growth from telecommunication companies and triple digit growth in spend from consumer electronics and quick serve restaurants. Much of January's overall increase can be attributed to Billboards which grew +29 percent in the month. This growth in OOH follows three straight quarters of growth in 2016, and +115 percent increase in spend from automotive companies on the year.

Television Is Far From Dead

Overall, the January 2017 television market saw a +5.7 percent increase ? continuing the upward trend SMI saw in 2016. Cable accounted for a bulk of the increase with +8.2 percent year-over-year in January while Broadcast saw +2.8 percent increase on the year. When you exclude sports programming, Broadcast TV remained flat with just +0.2 percent growth on the year but Cable remains strong with +7.5 percent increase thanks to an increase in spend on entertainment and news programming, +5.9 percent and +16.8 percent, respectively.

Conversely, when you break out just sports programming Broadcast increased spend by +6.3 percent and Cable grew by +11.1 percent. Again, highlighting that sports programming, and especially live sports, is what is fueling TV industry growth. Unsurprisingly, on its own, entertainment programming declined by -1.6 percent in broadcast and only grew +2.9 percent overall in National Television market.

"SMI's latest data reflects the fact that leading marketers, including Coke and P&G, have firmly come to the conclusion that linear TV is still the powerhouse of ROI. A lot of digital experimentation last year didn't deliver the expected results and advertisers are flooding back to tried and trusted mediums, and that includes Out of Home which is going through a real renaissance," says James Fennessy, CEO of SMI. "Digital's growth continues to slow and when removing Google and Facebook from the equation we see the sector delivering an anemic growth rate of just 2 percent. The NFL was the savior for Broadcast with the new president continuing to deliver big time for the cable news networks."



Mall Retailers are Competing on Speed to Stay Relevant

Traditional retailers are finally picking up the pace.

During fourth-quarter earnings reports last week, speed was top of mind for companies like Kohl's, American Eagle Outfitters, Gap Inc. and L Brands. In an increasingly competitive retail environment, the pressure is on for brands to tap into of-the-minute fashion trends and get new items on the sales floor faster.

The heat is thanks to fast-fashion retailers like Zara, H&M and Topshop that churn out trendy pieces in a matter of weeks, thanks to efficiently streamlined production cycles. It's affecting luxury fashion, too, as these fast-fashion companies are ripping and reproducing trends from the runway months before they go on sale. As a result, department stores are pushing vendors to adopt a see-now-buy-now, in-season production cycle.

On Thursday, Kohl's CEO Kevin Mansell spoke to what he calls the company's "speed initiative." This year, 40 percent of Kohl's proprietary brands will operate on a faster production cycle, going from concept to sales floor in three months, rather than the typical six. Last year, it was 25 percent, with the sped-up brands concentrated in the juniors department. Mansell said that in the fourth quarter of 2016, those brands saw a single-digit lift in comparable sales.

"Women's apparel is definitely a focus in this effort," said Mansell during a call with investors. "We're going to use that as a blueprint in trying to reimagine everything from our organizational structures in various areas, including our stores, to the way we approach our business overall. So speed and agility is probably the number one strategy we have."

Faster production time is becoming table stakes. And it's not a trend that's being pushed within the industry, as much as retailers probably want to curse Zara -- it's customer behavior that's guiding retailers' hands.

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download