HHGregg files for Chapter 11 bankruptcy, finds buyer
Electronics and appliance retailer HHGregg announced Tuesday that the struggling business has filed for Chapter 11 bankruptcy.
The filing comes just days after the company announced the shuttering of 88 stores in 15 states, a move made to give the Indianapolis-based company a better chance at survival. Indiana stores were not among them.
HHGregg has signed a term sheet with an anonymous party to buy the retailer's assets, a news release said. The selling of assets will allow the company to exit Chapter 11 "debt free with significant improvement in liquidity for the future stability of the business."
“We’ve given it a valiant effort over the past 12 months,” Robert J. Riesbeck, HHGregg's president and CEO, said in the statement. “We have conducted an extensive review of alternatives and believe pursuing a restructuring through Chapter 11 is the best path forward to ensure HHGregg’s long-term success."
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Riesbeck said he expects the Chapter 11 process to be smooth and quick. The company expects to emerge from the restructuring in about 60 days.
“We have streamlined our store footprint and remain fully committed to the 132 remaining stores, and the associates supporting those locations. We have solidified our senior management team and everyone is dedicated to restructuring our business model for future profitability and growth,” Riesbeck said in the statement. “Through these strategic steps, we plan to come out of this debt free and more agile as we serve our valued customers and vendor partners, and continue to be a dominant force in appliances, electronics and home furnishings.”
HHGregg listed assets and liabilities of up to $50,000 in its Chapter 11 filing in the U.S. bankruptcy court for the Southern District of Indiana. Gregg Appliances listed assets and liabilities in the range of $100 million to $500 million in a separate filing, Reuters reported.
The retailer, which has lost money for the past two years, recently reported poor holiday sales. Sales at stores that have been opened for at least a year declined 22.2 percent during the most recent fiscal quarter.
The store closures, announced Friday, should be complete by mid-April. About 1,500 people are expected to be laid off, marking the second round of layoffs in as many months at HHGregg. The company last month said it was laying off 100 people, including 70 workers at its 96th Street headquarters.
HHGregg's 132 stores will continue with their usual day-to-day business.
Over the years, the retailer has struggled for market share against online retailers and traditional big-box stores such as Best Buy.
To stand out, the company has tried to reinvent itself as a high-end appliance store through its Fine Lines division. It's the seventh-largest appliance retailer in the U.S. behind Lowe's, Home Depot, Sears, Best Buy, Sears Hometown and Wal-Mart, according to the consumer electronics trade publication Twice.
HHGregg is not the only brick-and-mortar retailer making changes to fight off the online market. Bloomberg reports that Best Buy Co. and Target Corp. recently announced plans to expand their online offerings and cut prices respectively. The announcements alarmed investors, and the two companies saw their shares tumble as a result.
The New York Stock Exchange delisted HHGregg stock in February. Tuesday afternoon shares were trading for pennies on the over-the-counter markets. Shares traded as high as $30 in 2010.
HHGregg was founded in 1955 by Henry Harold Gregg and his wife, Fansy, with the first store finding its home near 46th Street and Keystone Avenue.
The company would grow from a small family-run business into a national, publicly traded chain under the direction of Gregg's grandson, Jerry Throgmartin.
A graduate of the University of Indianapolis, Throgmartin joined the family business in sales in 1975 and worked his way to the top, succeeding his father, Gerald, as president in 1989.
Under his direction, the company grew through acquisitions and new store openings and sold everything from small appliances to big-ticket items.
Between the company going public in 2007 and Throgmartin's passing in 2012 at the age of 57, HHGregg expanded to 220 stores from about 100, with sales rising to more than $2.5 billion from less than $1 billion.
The last member of the family to lead the business was Throgmartin's son, Greg W. Throgmartin, who stepped down from his position as chief operating officer in 2014 after 13 years with the chain.
IndyStar reporter James Briggs contributed to this story. Call IndyStar reporter Justin L. Mack at (317) 444-6138. Follow him on Twitter: @justinlmack.