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Shining a light on PE ownership.

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HH

hhgregg

retail
PE-OWNED

Electronics and appliance retailer specializing in home entertainment and appliances.

PE-OWNED

Acquired by Golden Gate Capital2016-01-22

View PE Firm Profile

What Made It Great

“

Regional electronics and appliance retailer with strong customer service focus

What PE Will Likely Do

Predictions

hhgregg will likely experience significant store closures and a decline in product selection and quality as Golden Gate Capital implements cost-cutting measures

HIGH LIKELIHOODBased on: Golden Gate Capital's track record of cost-cutting and debt loading in retail acquisitions

Customers will likely notice reduced inventory levels, older or refurbished electronics and appliances, and a decline in in-store customer service and support

HIGH LIKELIHOODBased on: The industry playbook for PE tactics in the retail sector, which includes store closures, inventory reduction, and deferred maintenance

The brand's reputation for high-quality products and knowledgeable staff will likely deteriorate as Golden Gate Capital prioritizes short-term cost savings over long-term brand value

HIGH LIKELIHOODBased on: The history of similar PE-backed retail acquisitions, such as Bon-Ton Stores and California Pizza Kitchen, which have ultimately resulted in bankruptcy

Expected Timeline

Phases
0-6 monthsCompleted

“0 to 6 months months”

Announcements about 'transformation' and 'optimization' with plans to close underperforming stores

6-12 monthsYOU ARE HERE

“6 to 12 months months”

First round of store closures and staff reductions announced, leading to a noticeable decline in inventory selection and product quality

12-24 months

“12 to 24 months months”

Continued store closures and further reductions in inventory, including a shift towards more refurbished or lower-end models of electronics and appliances

24-48 months

“24 to 48 months months”

Bankruptcy rumors begin to surface as Golden Gate Capital implements more aggressive cost-cutting measures, including potential liquidation of the company's assets

Similar Cases

Other companies that followed a similar path after PE acquisition

Operating

Toys R Us

KKR·2005

See full case study
Bankruptcy

Sports Authority

Leonard Green & Partners·2006

See full case study
Operating

Payless ShoeSource

Golden Gate Capital·2012

See full case study
Operating

99 Cents Only Stores

Ares Management·2012

See full case study
Operating

Joann

Leonard Green & Partners·2011

See full case study

What You Can Do

Take Action

Actions

  • Be cautious of making large purchases at hhgregg, as the product quality and selection may decline over time

  • Consider shopping at alternative retailers that are not under PE ownership, as they may be able to provide a more reliable and consistent customer experience

  • If you are a current hhgregg customer, closely monitor the changes in the company's operations and be prepared to take your business elsewhere if the quality of products and services deteriorates

Alternatives

CostcoSAFE

Employee-owned warehouse retailer

TargetSAFE

Publicly traded retailer with strong values

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"hhgregg is now PE-owned. Here's what that means for you."