Beaumont, Texas — Conn’s, a specialty retailer of home appliances, consumer electronics and furniture, reported relatively flat net income and higher sales for the quarter and year, ended Jan. 31.
Net income for the fourth fiscal quarter decreased 1 percent to $12.7 million compared with $12.8 million for the fourth quarter of last year.
Total revenues for the quarter, ended Jan. 31, increased 3.2 percent to $212.6 million compared with $206.1 million for the quarter that ended Jan. 31, 2006. This increase in revenue included increases in “finance charges and other” of $2.2 million, or 10.3 percent, and an increase in net sales of $4.3 million, or 2.3 percent.
Same-store sales (revenues earned in stores operated for the entirety of both periods) decreased 2.2 percent for the fourth quarter of fiscal 2007. As previously disclosed, the same store sales increase for the quarter ended Jan. 31, 2006 of 22.6 percent was positively impacted by hurricanes Katrina and Rita.
Net income for the year decreased 1.9 percent to $40.3 million compared with $41.1 million for the prior year.
Total revenues for the year increased 8.5 percent to $760.7 million compared with the previous year’s $701.1 million. This increase in revenue included net sales increases of $56.2 million, or 9.1 percent, and increases in “finance charges and other” of $3.3 million, or 4.1 percent. Same-store sales (revenues earned in stores operated for the entirety of both periods) increased 3.6 percent for fiscal 2007.
In a conference call, executive vice chairman and chief operating officer Bill Nylin said CE sales rose 15 percent and white goods sales increased 4 percent for the quarter. Nylin noted that margin pressure in flat panel has stabilized somewhat for the moment, but anticipates further price erosion by the holiday selling season. Conn’s hopes to offset the margin declines in video by expanding its more profitable furniture business, he said.
Nylin added that massive layoffs of sales clerks at Circuit City will provide an opportunity to “pick up some quality sales associates.”
Credit portfolio performance improved as delinquencies and credit loss rates were lower as compared with the third quarter of this year and continued to show improvement in the first month of fiscal 2008. Delinquencies also improved relative to year over year results. The credit loss rate was consistent for the quarter and higher for the year when compared to corresponding periods of the prior year.
“Considering the tough comps and the challenge to our credit operations, both of which were brought on by the effects of the storms in 2005, we really had a good year,” said Thomas J. Frank, Sr., chairman/CEO. “The storms affected overall operating results last year positively and this year negatively. If you averaged the performance of the two years together, you get same store sales growth of over 10 percent a year and earnings growth of over 15 percent a year. And we finished the year strong.”
During the fiscal year, ended Jan. 31, the company opened six new stores, three in its Houston market, one in San Antonio and two in the Dallas/Fort Worth market, bringing the total store count to 62. Conn’s expects to open six to eight new stores in the coming year.
In other news, Conn’s announced that chief financial officer David Rogers will retire from the company next January, and will be succeeded by controller and assistant chief financial officer and treasurer Michael Poppe. Before joining the chain in 2004, Poppe held various accounting and finance management positions in public accounting at Arthur Andersen, and in automotive retail companies including Group 1 Automotive, where he most recently served as VP and corporate controller. – Additional reporting by Alan Wolf
