A quick look around the just opened Flatbush, Brooklyn location of
Conn's reported double-digit increases in net income and total revenues in its first fiscal quarter, ended April 30.
Net income increased 18.8 percent to $11.4 million, compared with $9.6 million for the first quarter of last year.
Total revenues for the quarter increased 21.5 percent to $192.1 million, compared with $158.2 million for last year's first fiscal quarter. This increase in revenue included a net sales increase of $32.8 million, or 23.6 percent, and an increase from “finance charges and other” of $1.2 million, or 6.1 percent.
Same-store sales increased 16.1 percent during the quarter. Last year's hurricane season in the region Conn's operates resulted in increased sales, but also negatively impacted its credit portfolios, the chain said.
Same-store sales, excluding the storm-impacted markets of southeast Texas and Louisiana, increased 11.6 percent. The markets excluding the southeast Texas and Louisiana markets accounted for 78.7 percent of same store product sales and service maintenance agreement commissions during the quarter, ended April 30.
“We continue to enjoy strong sales growth with comp-store increases in the mid-teens as well as the benefit of new store sales,” said Tom Frank, Conn's chairman/CEO. “We expect to open five to six stores during this fiscal year, with one opened during the first quarter and another just opened in late May. Both of these stores were opened in our Houston market. Product margin remained constant while overall margin was down due in part to the previously reported effects of loan losses caused by the disruption in our credit collection activities during our Hurricane Rita evacuation.”
Conn's currently operates 58 stores in Texas and Louisiana.
Overall margin decreased approximately 170 basis points, with 70 basis points of the reduction due to slower growth in securitization income, which was impacted by higher loan losses, primarily as a result of the impact of Hurricane Rita on its credit operations, and increased program costs; 70 basis points coming from reduced penetration on the sales of service maintenance agreements and credit insurance; and 30 basis points due to various other factors. Partially offsetting the margin shortfall was a decrease in SG&A expense as a percentage of revenue of about 90 basis points.
In a conference call, Frank said that the company had developed a new store format that's currently being tested in about eight locations. The prototypes, which he described as “extremely successful,” will lend Conn's the appearance of a national, rather than a regional chain, and are attracting a higher-end customer.
Elsewhere, Frank said Conn's will open a secondary operations center in Dallas next week that will serve as a back-up to its main facility in Beaumont, Texas should the town be impacted by another Hurricane Rita-level storm. — Additional reporting by Alan Wolf