Beaumont, Texas — Despite the loss of sales due to closed stores in the path of destructive hurricanes, specialty retailer Conn’s posted a 30.4 percent fiscal third-quarter increase in total revenue, hitting $173.3 million, up from $132.9 million in the year-ago three months.
This increase included a 33 percent jump in third quarter net sales, to $153.1 million from $115.1 million, and a 13.8 percent rise in finance charges, to $20.2 million from a year-earlier $17.8 million. Same-store sales increased a whopping 23.3 percent in the third quarter, ended Oct. 31, due, in part, to “improved execution, attention to detail, effective sales promotions and the post-storm impact of hurricanes Katrina and Rita,” said the chain.
Conn’s, which includes major appliances, consumer electronics, computers, mattresses and lawn and garden products among its store selection, recorded a 44.6 percent jump in net income during the third quarter, reaching $9.1 million, up from $6.3 million in the same three months in 2004.
The chain derives a percentage of its income from in-house credit options for customers, and historically has financed on average, about 56 percent of retail sales.
“This quarter presented us with numerous challenges, but our people met them with uncommon dedication and determination to succeed,” said Thomas Frank, chairman/CEO. “The results are a testament to an extraordinary ability to execute and a passion to win.” Frank added, “Due to the nature of the events of this quarter, it was necessary to record certain special charges, but we still had a very good quarter.”
Expenses incurred relative to Hurricane Rita in the quarter totaled about $822,000. These included costs of repairs to facilities, loss of damaged merchandise and costs associated with temporarily relocating and operating corporate functions away from the storm-affected area, net of estimated probable insurance reimbursement of $1.1 million.
Due to evacuations in the Houston market and actual loss of essential services in the storm-affected area in southeast Texas and southwest Louisiana after the storm, several stores were closed, resulting in 134 lost store days during the quarter or about 2.7 percent of the available store days, said Conn’s.
While financial results of the third quarter include loss of revenue due to the closed stores, it also includes the positive impact of increased sales due to replacement of storm-damaged appliances and CE products. The overall net positive impact to third quarter sales due to the storm is estimated at about 7 to 9 percentage points of the same-store sales increase.
Also impacted by the storm were collections on outstanding customer receivables, which resulted in an increase on delinquencies greater than 60 days of nearly 1.5 percentage points. This increase in delinquencies could ultimately result in higher charge-offs in the next fiscal year, said Conn’s.
In the nine months, total revenue increased 22.6 percent, reaching $495.8 million, compared with a year-on-year $404.4 million. This increase included a net sales jump of 23.6 percent to $435.9 million, from $352.5 million last year, and a 15.6 percent rise in finance charges, to $60 million, from $51.9 million the prior year. Same-store sales in the nine months rose 14.4 percent.
Net income for the nine months soared 35.3 percent, hitting $28.3 million, up from $20.9 million in the same period in 2004.
During the third quarter, Conn’s continued its expansion into the Dallas/Fort Worth market, with the opening of a clearance center in Mesquite, Texas, bringing its store count to 12 in the metroplex. Total companywide store count is 56, only in the states of Texas and Louisiana.
