By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Net income soared 37.3 percent at Conn's during the specialty retailer's fiscal second quarter, jumping to $9.3 million, up from a year-ago $6.8 million.
As reported earlier, total net sales climbed 21 percent in the three months, reaching $143.8 million, compared with $118.9 million in the second three months of last year. Same-store sales rose 12.1 percent.
Total revenue in the second quarter, including $20.5 million in finance charges, increased 20.3 percent, hitting $164.4 million, up from $136.6 million a year earlier, which included $17.8 million in finance charges.
“We are obviously pleased with both the top-line and bottom-line growth and performance so far this year,” said Tom Frank, chairman/CEO. “We have achieved our goals in opening new stores thus far this year, and with the new DC [distribution center] opening in Dallas, we are optimistic about our continued growth for the remainder of the year.”
In a conference call, Frank cited sharp execution and lower loan losses for the solid results. He attributed the former to a major restructuring of its sales and merchandising organizations and the latter to an expansion of its credit and accounting staffs and the judicious use of extended term promotional credit.
During the second quarter, ended July 31, Conn's continued its expansion into the Dallas/Fort Worth metroplex with the opening of two additional stores, bringing its store count in this market to 11 as of July. Frank said the company continues to be “very positive” about the Dallas area, which has a “very large upside potential.” Frank also identified the South Texas market along the Mexican border as another growth area for Conn's, where the company operates one store in McAllen and opened a new unit in Harlingen during the first week in August. The chain may add a second store in McAllen, and is considering entering Brownsville, he said.
Total store count rose to 54 during the quarter, and Conn's anticipates operating 56 to 58 locations in its Texas/Louisiana market by the end of next January. The company has also identified some 50 additional sites in San Antonio, Houston, Dallas/Fort Worth and throughout Louisiana where the chain could backfill markets to better leverage regional infrastructure, Frank said.
For the six months, Conn's, which offers a combination of major appliances, consumer electronics, computers, mattresses and lawn and garden products, reported net income of $19.1 million. This was a 31.3 percent increase over the $14.6 million recorded in the fiscal first half of last year.
As reported, total six-month net sales climbed 19.1 percent to $282.8 million from a prior-year $237.4 million. Same-store sales were up 10 percent. Total revenue, including $39.8 million in finance charges, increased 18.8 percent, hitting $322.5 million, up from $271.5 million the previous year, which included $34.1 million in finance charges.
During the conference call, Frank also provided his take on a range of industry issues, including:
the Maytag-Whirlpool merger: Whirlpool is the company's third-largest vendor, he said, and the merger would only strengthen that relationship. “We don't see any detriment to our business.”
market-share shifts in white-goods retailing: Frank cited a survey by TWICE market research partner The Stevenson Company showing that Sears' majap share fell from 36.7 percent to 33 percent of total units shipped during the second quarter, and Best Buy's share slipped from 7 percent to 6.3 percent, while Lowe's grew its share from 14.5 percent to 16.1 percent, and The Home Depot's rose from 8 percent to 9.2 percent. Conn's also picked up share from Sears' retreat, he said
the fourth quarter: “We're very excited,” he said, citing price declines in — and abundant supplies of — plasma, LCD and rear-projection microdisplay TVs. “They're at prices people can afford, and that bodes well for our business.”
high fuel prices: When people drive less, they tend to focus on their homes by updating their kitchens and entertainment systems, he said. “One tank of gas equals the cost of a monthly payment on a widescreen TV.”
— Additional reporting by Alan Wolf
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