Conn's Q2 Comps Climb 22%
By Alan Wolf On Aug 7 2012 - 1:12pm
Beaumont, Texas - Higher average selling
prices (ASPs) and strong demand for furniture, mattresses and tablets sent
same-store sales soaring 21.5 percent during Conn's second fiscal quarter.
Net sales increased 12.9 percent to $171.7
million for the three months, ended July 31, while retail gross margin, which
includes gross profit from product and service-agreement sales, was up 470
basis points year over year to 33.5 percent.
Margins were buoyed by higher ASPs as the multiregional
specialty chain shifted its mix away from low-priced products, although the new
pricing approach, and the impact of 11 store closings last year, also led to
lower unit volume.
Leading the sales charge was furniture and
mattresses, which showed a 57.5 percent increase in comp-store sales. The two
categories now comprise nearly 19 percent of the merchandise mix, up from 14
percent during the year-ago quarter.
Comp sales for the home office category
increased 41.5 percent, driven by greater tablet sales and a 27 percent spike
in computer ASPs. The gains were partially offset by the impact of the store
closures, reduced unit volume for computers, and lower sales of accessories.
Home office now comprises 8.4 percent of Conn's merchandise mix, up from 7
percent last year.
Major appliance comps increased 7.2 percent
during the period, reflecting a 25 percent hike in ASPs but a 19.1 percent
decline in unit volume, one-third of which was attributable to the store
closures. Laundry comps increased 15.4 percent, refrigeration rose 7.5 percent,
and the cooking category increased 17.4 percent, although milder temperatures
within Conn's trading areas led to an 18.9 percent decline in room air sales.
Majaps slipped from 34 percent of the mix last year to 30.3 percent during the
CE comps rose 4.6 percent on gains in TV
and home theater/audio, partially offset by lower sales of gaming hardware and
accessories. The move away from low-priced, low-margin TVs led to a 32.1
percent increase in TV ASPs, although unit sales fell 20.5 percent, driven in
part by the store closures. CE slipped from 31.2 percent of the mix last year
to 27.1 percent during the quarter.
Service-agreement comps increased 35.7
percent to comprise 7.2 percent of the sales mix, up from 6.5 percent last
During the quarter the company opened its
sixth Conn's Home Plus store, in Waco, Texas. Chairman/CEO Theo Wright said the
new location has generated "solid revenues in July, positioning it within the
top 10 percent of our 65 stores ranked on sales." The Home Plus design is
larger and more furniture-focused than previous store types, and the company
plans to convert 14 locations to the new format by January.
The preliminary sales results show a
continuation of the company's comeback under Wright, who reversed a string of
consecutive losses and led Conn's to a 163 percent increase in first-quarter profits
The chain will report its full second quarter results on Sept. 5.