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HHGregg Inc. continues to plow into new markets, opening an average of one store a week, even as Wall Street is feeling less gung-ho about the prospects for such a fast-growing brick-and-mortar electronics chain.
Investors and analysts worry about the Indianapolis-based chain's two years of same-store sales drops, limited exposure to the hot tablet-computer and smartphone categories, flat-lining sales of high-end televisions, and formidable competition from online players like Amazon.com.
In June 2010, investors hid up shares of the home electronics and appliance chain to more than $31, as HHGregg raced to secure dozens of new store locations to take advantage of a depressed commercial real estate market and fill a void left by the bankrupt Circuit City.
The shares have tumbled by more than half since then, reaching a low of about $12 in April, before recovering to roughly $13.50 in May trading.
Some of the same analysts who slapped the shares with buy ratings when they traded in the mid-$20 range now urge caution, though they still have high hopes the chain's rapid growth - and strategy of using highly trained commission sales associates to sell the latest electronics and appliances - will find surer footing in the not-too-distant future.
"HHGregg Inc. remains one of the more compelling longer-term-growth stories in our coverage universe," KeyBanc analysts wrote in an April 18 report.
HHGregg, which was founded in 1955, added 42 stores in its just-ended fiscal year and plans to add as many as 45 more in the current fiscal year, including its first locations in Pittsburgh, Miami and Chicago.
The chain had just 50 stores in 2004, now has 173, and is building toward a goal of 600 locations coast-to-coast.