Conn’s Q3 Sales And Comps Increase

TV sales rose 6% on higher ASPs and lower unit volume
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Double-digit volume gains for furniture and mattresses helped drive net and comp sales in Conn’s third quarter.

Double-digit volume gains for furniture and mattresses helped drive net and comp sales in Conn’s third quarter.

 The multiregional furniture, CE and majap chain said net revenues rose 6.8 percent to $395.2 million for the three months ended Oct. 31, aided also by the net addition of 12 stores year over year.

Comp sales increased 3.8 percent, excluding video gaming, digital imaging and certain tablets, which the company has since dropped.

 Conn’s reported a net loss of $2.4 million, comprised of $2.5 million in consultancy, litigation and executive transition costs and a $1.4 million loss to pay down debt, compared to a year-ago net loss of $3.1 million.

In a statement, recently appointed CEO Norm Miller said he is “excited to begin my tenure at the helm of Conn’s with its distinctive business model, delivering great value to a growing population of underserved customers. While not happy with the results this quarter, I am pleased with the progress we are making to improve retail and credit trends.”

 Those trends include:

*a 90-basis-point increase in retail gross margin through a greater mix of furniture and mattresses and higher retrospective commissions on repair service agreements;

*an enhanced marketing strategy in November that drove a strong increase in credit applications, leading to a high-teens percent increase in Thanksgiving period written sales and an 8 percent comp increase in November; and

*a 10 basis-point decline in 60-day-or-greater delinquencies thanks to investments to enhance underwriting.

On the retail side:

*CE unit volume decreased 11.7 percent, partially offset by an 8.8 percent increase in average selling price (ASP). TV sales increased 5.8 percent as ASPs increased 8.8 percent, partially offset by a 2.7 percent decrease in unit volume. Excluding the exited categories, CE comps were flat, driven by flat TV comps;

* Majap unit volume increased 4.8 percent on flat ASPs. Refrigeration sales increased 4.6 percent and cooking sales increased by 10.6 percent, with laundry sales flat. Total category comps slipped 1.9 percent; and

* Furniture unit volume increased 28.7 percent, partially offset by a 3.8 percent decrease in ASPs, while mattress unit volume increased 31.2 percent, partially offset by an 8 percent decrease in ASPs. Comps for the combined categories increased nearly 19 percent.

During the quarter the company opened six new HomePlus stores, including four in North Carolina.

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