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HHGregg accelerates store-opening plans

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HHGregg Inc. said this morning that the bankruptcy of competitor Circuit City should enable the company to open more stores within the next few years than previously expected.

The Indianapolis-based electronics and appliances retailer now plans to open between 20 and 22 stores in fiscal 2010, which began March 31, up from previous estimates of 16 to 18 stores. In addition, HHGregg said it expects to open between 40 and 45 more stores in fiscal 2011.

The company opened 20 stores in fiscal 2009.

The company said Virginia-based Circuit City's demise and the real estate available from the store closings prompted executives to accelerate the growth strategy.

"These changes have created significant opportunities for the company to expand at growth rates greater than previously projected," the company said in a prepared statement.

Cities targeted for store openings next year include Tampa, Fla.; Memphis, Tenn.; and Richmond, Va.; as well as Philadelphia, Baltimore and Washington, D.C., in fiscal 2011.

The company has lease agreements for nearly all of the new stores expected to open during fiscal 2010, at a cost of roughly $45 million to $50 million. It also has begun to execute leases for stores that should open the next fiscal year. HHGregg so far has approved 18 locations for 2011.

Stores opening in fiscal 2010 will be funded from cash from operations and the company's revolving credit line. HHGregg said it is exploring various financing alternatives, including equity and debt, to fund the opening of remaining stores.

The company is undertaking the expansion despite a highly competitive environment for electronics and appliance retailers, and a challenging economic climate.

In early June, HHGregg reported an 8.3-percent drop in fiscal 2009 same-store sales, a key measure of health for retailers. The company expects to report another 7-percent to 12-percent drop during the current fiscal year. Same-stores sales measure revenue at stores open at least a year.

HHGregg currently operates 112 stores in nine states, mostly in the Midwest and South.

Company shares rose 11 cents this morning, to $14.69, down from a 52-week high of $19.10 in April.

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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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