Conn's Posts Q2 Loss
By John Laposky -- TWICE, 8/27/2009
Beaumont, Texas - Conn's reported flat sales and negative revenue growth in the fiscal second quarter, punctuated by declining same-store sales, tighter margins and an increase in the company's bad debt reserve.
Total revenues for the CE and home-furnishings specialty retailer's quarter increased 0.8 percent to $220.2 million, compared with the same quarter in the prior fiscal year, while total net sales declined 0.2 percent to $190.3 million.
Same-store sales dropped 5.2 percent but were partially offset by what the company believed to be an increase in market share, as total television unit sales grew 28 percent, furniture and mattress revenues grew 10.7 percent and total home appliance revenues grew 2.6 percent.
Conn's blamed the same-store sales decline on "the increasingly challenging economic conditions experienced in the company's markets and the decline in average selling prices on flat-panel televisions."
The company said revenue growth in furniture and mattresses and appliances was offset by declines in the CE and lawn and garden categories and service maintenance agreement commissions, the company said.
Adjusted net income for the quarter was $4.9 million, compared with $11.0 million in the year-ago period.
Conn's said growth in its bad debt reserve reduced its profit in Q2. The bad debt reserve rose to $2.7 million from $300,000 million in the year-ago period. The company, which provides flexible in-house credit options for its customers, said it has financed about 61 percent of its retail sales in the last three years.
"While our second-quarter performance did not meet our expectations, we feel that we gained market share across our core categories. As economic conditions continue to weigh on consumers, our customers are searching for value, customer service and financing, all of which are part of our unique shopping experience," said Conn's president and CEO Timothy Frank. "For the second half of the year, we are focused on executing in our stores, growing our market share, maintaining strong credit quality in our credit portfolio and continuing to invest in the business to drive growth, while implementing identified cost saving opportunities and maintaining our focus on cost control."
Conn's currently operates 75 stores in Louisiana, Oklahoma and Texas and has plans to add three to five stores during the current fiscal year, the company said.
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