The specialty retailer focuses on high-end video products and home appliances and operates under two brand names: hhgregg and Fine Lines. There are more than 79 stores in eight states, so the company has a small presence compared with competitors like Best Buy
It focuses on premium products, which allows for higher margins. There are more than 100 models of flat-panel televisions from brands like Hitachi, Mitsubishi, Samsung, Sony
As for home appliances, hhgregg sells top-of-the-line dishwashers, freezers, and refrigerators. Some of the premium brands include Bosch, KitchenAid, Subzero, Thermador, Viking, and Wolf. The company's major supplier is Whirlpool
Of course, premium products can be found on the shelves at Best Buy and Circuit City, but hhgregg offers something unique that has led to customer loyalty -- services including same-day installation, in-home repair and maintenance, and extended service plans.
The company offers a juicy financial model as well. A typical store generates positive cash flow within three months of opening, and the cash payback occurs in less than two years. The average store generates about $13.4 million per year in net sales, and overall sales in the past year grew 17.7% to nearly $1.1 billion.
According to hhgregg, the long-term growth potential is about 400 stores in the U.S. With a balanced merchandise mix and strong financial model, the company has demonstrated more stability in cash flows and growth compared with its rivals. So for Foolish investors looking for an interesting retail growth play, hhgregg is a new player to keep an eye on.
For more Foolishness: