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Home >> Conn's: Majaps, Furniture, Mattresses Drove Growth
THE WOODLANDS, TEXAS — Conn’s reported major revenue and net income gains in its fiscal fourth quarter, ended Jan. 31, due to furniture, mattress and major appliance sales.
Furniture and mattress sales rose 54.2 percent from the same quarter last year, accounting for the majority of the reported growth. Double-digit revenue growth was also reported for appliances and home office equipment, the chain said.
In its fiscal fourth quarter, consolidated revenues grew 10.4 percent from the prior-year period to $250.3 million. Net income for the quarter was $17.7 million, up from the prior year’s $7.7 million.
Meanwhile Conn’s said same-store sales increased 7 percent year over year, on top of same-store sales growth of 12.1 percent last year.
Retail segment operating income was $19.8 million on an adjusted basis, more than double the level reported in the prior-year period.
“Continued revenue and profitability improvement in our retail and credit operations generated record fourth-quarter and full-year results,” said Theodore M. Wright, chairman and CEO. “Our five new Conn’s HomePlus stores are performing well, and we plan to open 10 to 12 more over the balance of fiscal 2014. Average revenue for the new stores was 1.6 times the overall company average for the three months, ended March 31, 2013, with approximately 36 percent of those sales generated from furniture and mattresses. Same-store sales for February and March rose 15 percent on a combined basis over last year despite a 3 percent decline in same-store sales of consumer electronics.”
The year-over-year comparison also reflects the benefit of the five new Conn’s HomePlus stores opened in fiscal 2013 — with January 2013 being the first full month all new stores were operating.
Additionally, 20 existing stores were updated to the Conn’s HomePlus format as of year-end, favorably influencing results. The closure of one store during the current quarter and seven stores in the previous four quarters tempered the reported growth.
For the quarter, retail gross margin was 36.9 percent, an increase of 720 basis points over last year. Continued margin improvement was realized in each of the product categories — reflecting the benefit of the sale of higher price-point, higher-margin goods, and sourcing opportunities.
The majority of the margin expansion was driven by the consumer electronics and appliance categories, which accounted for almost two-thirds of product revenue for the current quarter, the retailer reported.
Product margin on furniture and mattress sales rose 11.1 percentage points from the prior-year period to 46.7 percent of sales, also favorably impacting retail gross margin. Furniture and mattress sales were 20.9 percent of total product revenue in the current period and accounted for 30.8 percent of the total product gross profit.
For the year, total revenues were $865 million, up from the prior year’s $792.3 million. Net income was $52.6 million, compared with a net loss of $3.7 million, and operating income was $100.5 million, compared with the prior year’s $29.7 million.
Conn’s provided the following guidance for the upcoming full year: Same-stores sales should be up 3 percent to 8 percent; there will be new store openings of between 10 and 12; and the retail gross margin will range between 35.5 and 36.5 percent.
Conn’s currently operates 68 retail locations in Texas, Louisiana, Oklahoma, New Mexico and Arizona.
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