Indianapolis-based HHGregg Inc. says it’s moving its Indianapolis and Chicago distribution activities to the Cincinnati area, a move which will affect 40 local jobs.
The Indianapolis facility is on East 96th Street, adjacent to the company’s corporate offices and one of its retail stores.
“We have made the necessary decision to restructure our current Midwest distribution network. We will be consolidating the distribution activities from the Indianapolis and Chicago regional distribution facilities into a new, third-party managed facility in Hebron, Kentucky,” the appliance and electronics retailer said in a statement.
The distribution facilities receive products from manufacturers and store them until they’re sent to individual stores. Third-party logistics provider Ryder will manage the Cincinnati-area facility.
“Although difficult, this decision aligns to our strategy of providing our customers with satisfying home solutions at the best possible price,” the company said.
HHGregg said its Indianapolis and Chicago facilities will continue to function as delivery centers, which handle products set for delivery direct to customers’ homes.
The restructuring means that the 40 HHGregg Indianapolis warehouse employees will lose their jobs. Those workers will have the chance to pursue other jobs within HHGregg, interview for jobs with Ryder or work with a placement company.
HHGregg’s interim chief executive officer, Robert James Riesbeck, alluded to these changes in May during a fourth-quarter earnings call with analysts.
During that call, Riesbeck said the company was working to improve efficiencies in its logistics and supply chain activities.
“This involves reshaping our distribution footprint, realigning transportation cost, improving productivity, and changing our home delivery model,” Riesbeck said.
Those changes should save the company between $20 million and $25 a year over the next two years, Riesbeck said.
On Thursday, HHGregg confirmed to IBJ that the Hebron, Kentucky, distribution move is part of the larger strategy Riesbeck described.
HHGregg has struggled financially in recent years, and it’s made several changes in an effort to turn things around.
Founded in 1955, HHGregg has 226 stores in 20 states. Amid an aggressive growth phase in the mid-to-late 2000s, sales began to slip as the recession hit and tastes in consumer electronics began to shift.
During the fiscal year that ended March 31, HHGregg reported a loss of $54.9 million, or $1.98 per share. During that same period, revenue dropped 8 percent and comparable-store sales dropped 7.7 percent.
Over the past several years at least 10 senior-level employees have either resigned or been terminated by the company. The most recent departure came last week, when HHGregg announced that its senior vice president of marketing, ecommerce and strategy had resigned his position.
In another shift, HHGregg is expanding its emphasis on high-end appliances, which have been a bright spot for the company.
Earlier this month, the company announced its plans to expand its Fine Lines concept to additional stores. Currently, the retailer has 14 Fine Lines locations -- spaces that feature high-end appliances like SubZero, Wolf and Viking in upscale showrooms adjacent to existing HHGregg stores. The retailer currently has 14 Fine Lines locations, and it plans to add 25 to 30 more over the next two years. Indianapolis currently has two Fine Lines locations: 4161 E. 96th St. and 8921 S. U.S. 31.
The company also said it’s adding roughly 24 new online and call center positions, 19 of which will be located at its Indianapolis headquarters.
Over the past year, shares of HHGregg have traded between $1.46 and $6.58 on the NASDAQ exchange, down from highs of about $30 in 2010.
Shares of the company were trading at $2.17 on Thursday morning, up 17 cents from Wednesday’s close.