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7 Retail Stocks That Rocked in 2013

Stocks in this article: BBY ZLC CONN RH PSUN KIRK HGG

5. h.h. gregg

Year-to-date Total Return (as of Dec. 12): 100.57%

Price-to-earnings ratio: 15.47

Market Cap: $429 million

Big box retail chain, h.h. gregg (HGG), has approximately 230 stores across the Midwest and South. H.h. gregg has been slowly expanding its merchandise offering on the appliance side as it struggles to compete in the busy electronics niche against Best Buy and other smaller players like Conn's, as well as online with Amazon and even

This seems to be a win, although h.h. gregg's quarter which ended in Sept., was tough. The Indianapolis-based retailer said that sales fell 3.3% to $568.3 million, missing consensus estimates, while comps dropped 6.2% in the quarter.

Profit of 12 cents a share also missed analysts' estimates.

"Though we continue to see headwinds in our consumer electronics business, we are pleased with our ninth consecutive quarter of comparable store sales increases in the appliance category," CEO Dennis May said in the earnings statement. "Additionally, we are pleased with the completion of our sales floor reset and the progress made with our other initiatives aimed at the long term success of transforming our retail strategy."

"We have continued to make investments in our business, including the expansion of our consumer credit capabilities, with a seamless secondary credit option, and enhancements to our Web site," May added. "While pleased with our early efforts in reshaping our sales mix, our sales performance continues to demonstrate that this transition will take time as we introduce new products to offset the sales losses from the consumer electronics category."

The company reiterated its fiscal 2014 EPS guidance of 75 cents to 90 cents a share, but that includes negative store comps that fall between 2% and 3.5% as well as a decline in annual net sales by 1.5%, compared to previous guidance of an increase of 1% and 3.5%.

The company is "in the early stages of repositioning its business towards categories that leverage its core strengths, including consultative sales, large cube products, delivery/installation, and financed/bigger ticket purchases," wrote JPMorgan Chase analyst Christopher Horvers in a Nov. 1 research note, following earnings. He rates the company at "neutral."

"HGG is adding furniture, fitness, and other home categories (and rationalizing the video category)," Horvers adds. "We applaud the company's efforts in this regard, though headwinds facing the video category combined with mass/internet encroachment will make the transition a long journey. Net-net, we expect execution to improve going forward as the company strikes a more appropriate mix within its box and tweaks its price/margin philosophy, but tough to call a bottom in the overall consumer electronics business at this point."

Horvers cautions that "the key challenge for HGG is its ability to drive traffic into stores over the crucial holiday period, which continues to become more competitive every Christmas."

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