Retailer HHGregg Inc. wants to raise up to $300 million with offerings of company shares and debt with an eye toward bolstering its working capital and growing the chain, according to a filing with regulators.
On Friday, HHGregg filed a prospectus with the U.S. Securities and Exchange Commission to sell up to $300 million in common stock, preferred stock, warrants, debt securities or any combination thereof. The firm did not commit to a timetable, saying it would file specifics about offerings when necessary.
“We intend to use the net proceeds from any sale of securities by us for working capital, store growth and other general corporate purposes,” the company wrote in the prospectus.
As of March 31, Gregg operated 228 stores in 20 states. The Indianapolis-based retailer specializes in selling consumer electronics and appliances.
Many public companies are taking advantage of this year’s strong market performance with secondary stock offerings, according to Bloomberg News. They’ve completed 334 secondary offerings, the most since 1996.
Until recently, Gregg shares have enjoyed a rocketship-like ride. Since the beginning of the year, the stock price has risen about 117 percent, from just above $7 to a high of $17.71 in early June.
Companies may be trying to raise money before pumped-up stock prices fizzle, said Thomas Garcia, head of equity trading at Santa Fe, N.M.-based Thornburg Investment Management Inc., which manages about $85 billion.
“They’re thinking, we might be topping out here, and prices of their companies are at or close to all-time highs,” Garcia said. “If you’re going to do it, you want to do it while the market’s hot.”
The stock market saw a broad decline on Monday morning, and Gregg performed even more poorly. Shares slipped nearly 10 percent, to $14.70, after two hours of trading. The S&P 500 was down 1.8 percent.
The company saw a big drop in earnings in its latest quarter on decreased sales, lower profit margins and higher advertising expenses, it said in May.
The company reported earnings of $9.9 million, or 31 cents per share, for the fiscal fourth quarter, which ended March 31. That compared with $53.6 million, or $1.45 per share, in the same period a year ago.
Last year's quarter, however, included $39.6 million in earnings from a key-man life insurance payment. Adjusted earnings for the year-ago period were $14.5 million, or 39 cents per share.
Revenue for the latest quarter fell 2.6 percent, to $597.6 million.