Conn’s in-house financing business continues to be a pain-point for the multiregional retailer.
Despite solid sales in September, the 60-plus-day delinquency rate for customer credit card payments ticked up to 9.9 percent last month, compared to 9.7 percent the previous year.
In contrast, net sales rose 7.8 percent to $110.8 million for the four weeks, and comp sales rose 5.7 percent excluding video gaming, digital imaging and select tablets that were dropped from the assortment.
In a statement, recently appointed president/CEO Norman Miller said solid Labor Day weekend sales drove gains in the furniture, mattress and TV categories. Specifically:
* Furniture and mattress comps increased 15.7 percent, partially offset by lower average selling prices (ASPs);
* TV comps rose 1.2 percent as a greater mix of UHD models raised ASPs, partially offset by lower same store unit sales;
* Majap comps edged up 1.6 percent on higher ASPs and unit volume; and
* CE and home office comps declined 8.5 percent and 11.2 percent, respectively, due to the exits from the previously cited categories.
But roughly three-quarters of Conn’s retail sales are paid for with in-house financing, which has been a cornerstone of the company. The segment, however, has suffered successive losses — including a $9 million operating loss last quarter — as more of its core lower-income customers fall behind in their payments.
Countermeasures including tighter credit terms and increased provisions for bad debts have only crimped sales and added to the losses while failing to curb rising delinquency rates.
Last month, in a series of strategic moves designed to shore up the ailing segment and restore investor confidence, Conn’s changed chief executives, sold off $1.4 billion in customer credit receivables, and used the proceeds to pay down debt and repurchase stock.
It remains to be seen whether the retailer, which recently marked its 100th store opening, will be able to stem the tide of rising delinquencies under new chief exec Miller.
