HHGregg Inc.’s stock price has fallen by more than 18 percent this week after the company disclosed that it is postponing expansion plans in Michigan.
Shares of the Indianapolis-based appliance and electronics retailer slid from $8.49 each on Monday to $6.89 Wednesday morning.
The stock dropped a whopping 9.2 percent Tuesday, the fifth-largest percentage decrease for any stock trading on the New York Stock Exchange.
Crain’s Detroit Business reported Sunday that HHGregg had been in negotiations for the past six months with numerous landlords to open stores in the Detroit area and other parts of Michigan, but was postponing its plans to enter the Michigan market.
A developer who had been working with HHGregg on potential sites told the newspaper that the company did not give a reason for halting its plans.
Jeff Pearson, HHGregg’s senior vice president of marketing, told Crain’s that the company does not have any “firm commitments” for the Detroit market. He also said HHGregg often explores options in different markets to achieve its goal of becoming a national retailer of appliances and electronics.
HHGregg operates 223 stores in 19 states and has been in expansion mode, adding about 100 stores since early 2010. Earlier this month, the company announced four store openings in St. Louis, one each in Champaign and Springfield, Ill., and two each in Green Bay and Milwaukee, Wis.
But the retailer faces stiff competition from Best Buy and Wal-Mart, in addition to online retailers like Amazon.com
Besides the Michigan disclosure, a negative report Monday from The Motley Fool investment newsletter also may have contributed to HHGregg’s stock slide.
“When a company is unable to turn itself around and hits that point of no return, investors can ride the stock down and make some nice profits,” the report said. “Those with an appetite for thrills will sell the stock short or, for a more conservative plan, buy option puts to contain the risk.”
The report said that HHGregg’s new stores have not increased revenue enough and are adding to expenses.
The company posted a $5.7 million loss in the second quarter as same-store sales slid 5.1 percent. And management recently affirmed an earnings downgrade for 2013, now estimated at a range between 90 cents and $1.05 per share instead of the prior forecast of $1.12 and $1.27.
Shares of HHGregg were trading above $11 each as recently as July and had been as high as $30 in June 2010.