Conn’s Reports Strong Q1 Gains
By Alan Wolf -- TWICE, 5/31/2007
Beaumont, Texas — Conn’s, the regional CE and majaps chain, enjoyed solid sales and earnings during its fiscal first quarter ended April 30.
Net income for the period grew 8.3 percent to $12.9 million while total revenues rose 6.8 percent to $205.3 million. The revenue increases included gains in net sales of $9.7 million, or 5.6 percent year over year, and an increase in finance charges and other revenue of $3.5 million, or 16.9 percent, attributable to improved credit portfolio performance.
Same store sales slipped 0.3 percent against strong year-ago comps of 16.1 percent that were attributable to brisk replacement business after Hurricanes Katrina and Rita. In a conference call, chairman/CEO Tom Frank noted that comp sales rose 2.9 percent at stores that were unaffected by the Gulf Coast storms two years ago.
“We are off to a solid start and on track to achieve our goals for the year,” Frank said. “We were still feeling the effects of the storm at this time last year and performed well this quarter against a very strong quarter last year. I am encouraged by the performance of our credit operation and look forward to improved results after a difficult year.”
Indeed, same store sales are up 1.4 percent in May, and major appliance sales, which slipped 6.4 percent during the quarter, have since entered positive territory, Frank said. He added that the quarter’s poor majap performance reflected the effect of the storms and “the need for better execution” in that category.
Frank told analysts that high gas prices would likely boost his business, as consumers traditionally respond to rising fuel costs by curtailing vacations and “enhancing their home life” by buying entertainment products and remodeling their kitchens.
Conn’s currently operates 62 stores in Texas and Louisiana and plans to open seven to 10 new units in the latter half of the year, including its first foray into Oklahoma. Frank pegged a store expansion rate of 10 percent to 12 percent a year as “the most practical,” noting that the company experienced earnings declines and faltering execution when it exceeded that pace in the past.
On the management front, president Tim Frank has assumed the additional title of chief operating officer from executive vice chairman Bill Nylin, and senior retail VP David Trahan was promoted to executive retail VP with expanded responsibilities.
The company, a member of the NATM buying group, has recently expanded its product portfolio to include furniture and lawn and garden products in addition to its core white- and brown-goods assortment.
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