A series of accounting changes related to Conn’s troubled in-house credit operation contributed to a net loss of nearly $12 million in the company’s second fiscal quarter, compared with year-ago net earnings of $16.5 million.
Also dragging the retailer into the red was a 5.1 percent decline in comp-store sales for the three months, ended July 31. Conn’s said the decrease was exacerbated by its decision to drop gaming, imaging and select tablets last year, although the company lapped the exit in April.
Total retail revenues edged up 2.1 percent, due largely to new store openings.
Chairman, president and CEO Norm Miller described the second-quarter hit in part as a byproduct of a previously announced credit-business turnaround strategy. That effort includes “changes to our credit leadership team, investments in systems and analytics, refinements to our underwriting model and strategies to improve yield,” he said.
As anticipated, tighter credit standards have impacted sales growth on the retail side, Miller noted, and the company has cut its expansion plans to one new store this fiscal year and three during the next.
On the product front, every category posted comp declines during the quarter, led by an 11.6 percent drop in CE.
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