Appliance Sales Are on the Rise at 2 Businesses

Appliance Sales Are on the Rise at 2 Businesses

In retrospect, hhgregg has turned out to be a good way to make money in 2013. The company's stock has doubled since the beginning of the year, with a peak in September close to the trebling point. Year to date sales are up, but comparable sales are down -- though less than by this time last year. The shift in market sentiment may come from the business shifting its own focus from electronics to appliances, which have done well for the business this year.

While this year has been good, investors may still be wondering if hhgregg has what it takes to go the distance.

Sales shift to home appliances
The big move at hhgregg is similar to the move that Best Buy has seen. Both companies are having trouble shifting electronics in the new Amazon-dominated landscape. hhgregg 's comparable sales of consumer electronics have fallen 18%, year to date compared to 2012 . Best Buy's comparable consumer electronics sales fell only 2.5%, last quarter . On the plus side, both companies have had an increase in comparable store sales of appliances. Best Buy is winning that little war, though, with comparable appliance sales up 23.5% last quarter -- hhgregg grew those same sales increase just 2.6% .

The move has two underlying causes. The first is that appliances are hard to ship. While some things make sense to buy online -- books, games, live bees -- appliances are more complicated. That gives physical stores a leg up on Amazon and other online-only retailers. The second driver is the shift in consumer sentiment, which has moved back towards home improvement this year.

As existing home sales rise, homeowners are once again starting to spend more on renovation. 2013 has been a big year for renovation, with analysts expecting total spending to hit close to $150 billion by the end of the year . Appliances are a big part of any good -- and many bad -- renovation, giving Best Buy and hhgregg a new market.

The long term growth of the appliance market
As the existing home market continues to recover, appliance sales will continue to be strong. Home Depot is betting on the long-term strength of appliance sales, and undertook sales floor reset for its appliance division across hundreds of stores this year . All three companies believe that appliances will help their business grow down the line.

For what it's worth, existing home sales growth has slowed over the past three months, as mortgage rates have risen . Even so, there's still a lot of room for the sector to grow, especially as home prices rise and pull homeowners out of their underwater mortgages. Right now, Best Buy and Home Depot seem well placed to take advantage, while hhgregg is lagging slightly. Investors looking to bet on the housing market could do worse than using any of the three as a proxy for growth.

The battle for your home
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Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends and Home Depot. The Motley Fool owns shares of Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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