Conn’s Q1 Profits Up 8.5%
By Alan Wolf -- TWICE, 6/4/2009
Beaumont, Texas — Strong operating performance helped Conn’s increase net income 8.5 percent to $11.5 million for the first fiscal quarter, ended April 30.
Total revenue for the period rose 5.8 percent to $231.3 million, including a 12.2 percent boost from finance charges and other revenue which totaled $29.8 million.
But the challenging economic environment, Circuit City’s liquidation events and TV product shortages muted sales, Conn’s said. Total net sales increased 2.6 percent to $200.1 million and same-store sales fell 4.6 percent for the quarter as strength in the CE, furniture and mattress categories was offset by weakness in its track business, which includes PCs, small electronics and housewares, and lawn and garden.
Unit sales of major appliances bucked industry trends and rose 3.5 percent during the period, while unit sales of LCD and plasma TVs increased 45 percent and 72 percent, respectively.
The company reported improved performance of its private-label credit portfolio as the annualized net charge-off rate declined to 3 percent, compared with 3.4 percent during the prior quarter, and the 60-plus-day delinquency rate dropped to 6.9 percent, compared with 7.3 percent during the year-ago period.
Conn’s currently operates 75 stores and plans to open three to five new locations during its current fiscal year.
During a conference call, chief financial officer Mike Pope said the company anticipates weaker earnings for the current quarter due to tough year-over-year comparisons. Nevertheless, Tim Frank, in his first call as CEO, sited improving sales trends, including a 6.4 percent increase in CE sales and a 3.5 percent gain in appliance sales in May.
Frank said the chain’s business model, which includes a trained sales floor, flexible credit options and an in-house service department, has allowed it to grow in a challenging environment, as evidenced by its eight-place rise to No. 32 on TWICE’s recent Top 100 CE Retailers Report.
Also boosting sales is an expanded PC brand selection, increased promotional activity, and a new store layout, although Frank expressed concern over continuing tightness in TV supply and surprise over the accelerated decline in microdisplay demand.
He added that Conn's would cooperate fully with the Texas attorney general, who sued the chain for allegedly employing deceptive warrantee practices, and said the charges have had no affect on sales.
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