By Lisa Johnston
New products on display at the American International Toy Fair, held in N
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 same quarter in the previous year. 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 COO Bill Nylin said CE sales rose 15 percent for the year and 10.1 percent for the quarter, while white-goods sales increased 4 percent for the year and fell 10.9 percent for the quarter due to tough year-ago comparisons. Sales are trending flat for the current quarter. CE currently represents 32 percent of Conn's total sales and majaps comprise 34 percent of revenue, Nylin said.
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.
Based on studies of secret shopping tapes, Conn's will be adding more sales staff and will enhance training in order to improve sales-floor execution and sales rates. The extensive layoffs at Circuit City will provide an opportunity to "pick up some quality sales associates," Nylin said.
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.
Conn's, with 62 stores, expects to open six to eight new stores in existing markets in the coming year, and is developing a new store format that dedicates 30 percent to 40 percent more space to furniture. — Reporting by Alan Wolf and Steve Smith
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.