Beaumont, Texas — Strong flat panel TV sales and improved credit portfolio performance helped Conn’s grow net earnings 13 percent to $9.7 million for its second fiscal quarter, ended July 31.
Total revenues for the three months increased 11.7 percent to $203.5 million, including a 9.4 percent gain in net sales of $15.4 million and a 32.1 percent increase in finance charges of $5.9 million.
Same-store sales grew 5 percent for the quarter and net revenue was up 8 percent in August, aided by brisk sales of flat panel TVs. In fact, the company reported a 90 percent increase in category dollar volume for the three months, while LCD TVs were up 124 percent and plasma displays were ahead 150 percent in unit volume for the first half of the year.
In a conference call, vice chairman Bill Nylin said flat panel demand remains strong, and is being fanned by “escalating promotions.
“The price competition has been similar to the holiday season,” he told analysts. “Not as crazy, but it’s day-in, day-out. Everyone is aggressive, the vendors and the retailers.”
Nylin said the price declines will drive more unit volume, particularly in 50-inch and larger plasma, and that margin declines are being offset by other, more profitable categories carried by Conn’s including major appliances and furniture.
Majap sales were up 1.3 percent for the quarter, with cool, wet weather putting a damper on room air demand. Laundry was also down, in units, but up in dollars thanks to the popularity of high efficiency – and high ticket – models.
Track sales, including laptop computers and portable CE products, were up 4 percent due to strength in the former and despite declines in the latter.
“We are pleased with our strong sales results and continued solid credit portfolio performance this quarter,” chairman/CEO Thomas Frank said in a statement. “We delivered excellent earnings growth in a challenging retail atmosphere, further proving the strength of our model.”
Looking ahead, Nylin said industry-wide flat panel supplies are expected to be tight for the balance of the year, with production running only 1 percent to 2 percent ahead of projected demand, according to suppliers.
Conn's, a member of the NATM Buying Corp., currently operates 63 stores in Texas and Louisiana. The chain plans to open 10 to 12 new units over the next 12 months, including its first Oklahoma locations, although recent heavy rainfalls will likely delay at least two openings into the first quarter of 2008.
The company will also expand its new store format, which devotes more floor space to furniture. The first prototype store, in Houston, saw a 40-percent spike in sales in the first month following the retrofit, Nylin said.