Customers trickled into the Hhgregg store near Short Pump Town Center on Thursday afternoon, some aware and some unaware that the store was one of 88 locations the Indianapolis-based retailer is closing as it tries to return to profitability.
“I actually like Hhgregg,” said Jamal Coles of Richmond, who stopped by the store to look for a PlayStation 4 video game console. “They have good stuff,” he said, adding that he still has the TV he bought from the store three years ago.
But there apparently haven’t been enough customers like Coles for the financially struggling electronics, appliances and furniture retailer. The company announced Thursday that it was shutting down more than a third of its 220 stores.
All three Richmond-area stores are closing — the store at 11732 W. Broad St. in Short Pump, plus stores at 1321 Huguenot Road near Chesterfield Towne Center and at 820 Southpark Blvd., near Southpark Mall in Colonial Heights.
In addition, Hhgregg is exiting all of Virginia, closing its 12 other stores in Newport News, Virginia Beach, Chesapeake, Fredericksburg, Fairfax, Falls Church, Woodbridge, Roanoke, Sterling, Manassas, Winchester and Springfield.
“We are strategically exiting markets and stores that are not financially profitable for us,” Robert J. Riesbeck, Hhgregg’s president and CEO, said in a statement.
“This is a proactive decision to streamline our store footprint in the markets where we have been, and will continue to be, important to our customers, vendor partners and communities. We feel strongly that the markets we will remain in are the right ones for our customers and our business model. Our team is dedicated to moving forward and being a profitable 132-store, multiregional chain where we will continue to be a dominant force in appliances, electronics and home furnishings,” Riesbeck said.
According to the company, current inventory in the affected stores will be sold over the coming weeks, with final closings expected to be complete by mid-April. About 1,500 jobs will be lost when the stores close.
At the Short Pump store on Thursday, a manager said a liquidation sale would begin today.
The manager, who declined to give his name and deferred questions to the company’s headquarters, said that he had been an employee at the store for seven years and that the store has 18 employees. He said employees learned about the closing by email Thursday morning.
Hhgregg, founded in 1955, entered the Richmond market in November 2009, moving into buildings in Short Pump and Chesterfield that were formerly occupied by the defunct consumer electronics chain Circuit City. In March 2010, Hhgregg continued its expansion into Virginia, opening stores in Colonial Heights, Newport News, Virginia Beach and Roanoke.
The company recruited many former Circuit City employees to fill positions. Circuit City at one point was the nation’s largest retailer of brand-name consumer electronics, but the company began losing market share to rivals Best Buy, Walmart and others. Circuit City filed for bankruptcy protection in November 2008 and closed its last stores in March 2009.
Hhgregg faced similar competitive forces — including online retailers that have taken a big chunk of the consumer electronics market, said Frank Badillo, director of research for the Henrico County-based market research firm MacroSavvy LLC.
“It’s just a tough category to be in,” Badillo said about the consumer electronics retail industry.
“It’s the category that has been hardest hit by the growth online. The overall category is growing, but store-based growth is not growing. It’s basically been flat or negative in recent years,” Badillo said.
Hhgregg reported a 22.2 percent drop in sales at stores open at least 14 months — mostly due to weak consumer electronics sales — during the fiscal third quarter that ended Dec. 31. Its loss for the quarter was $58.3 million.
In February, the chain hired a financial adviser and investment banker to pursue a range of potential strategic and financial transactions to help the company improve liquidity and return to profitability.
Bloomberg News reported late last week that the chain was preparing to file for bankruptcy protection as soon as this month.
Badillo said consumer electronics as a retail category has strong online penetration.
“It’s Hhgregg now. But Best Buy is going to see hard times in the future, as well, at least in terms of store growth,” he said.
As Hhgregg exits the Richmond market, another chain plans to enter.
Conn’s, a Texas-based retailer that carries furniture, appliances, mattresses and consumer electronics, plans to open a store later this year in Eastgate Town Center that is under construction near Nine Mile Road and Laburnum Avenue in eastern Henrico.
That store will be the company’s first in the Richmond area — and the first in Virginia. Conn’s operates more than 110 locations in 13 states.
Hhgregg officials also announced Thursday that it will close its distribution and delivery centers located in Brandywine, Md., Miami and Philadelphia. Those facilities will continue to support customer orders of all products sold in the closing locations until all products have been delivered.