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
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
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
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.
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.