Beaumont, Texas — Conn’s, the multiregion CE, majap and furniture chain, reported higher sales and earnings for the fourth quarter, ended Jan. 31, but mixed results for the full fiscal year.
The chain has also doubled its credit line to $100 million to provide added liquidity and to support future growth, the company said.
For the three-month period, net income increased 3.1 percent to $13.1 million while total revenue for the quarter rose 6.3 percent to $225.9 million. The revenue gain includes a 6 percent increase in net sales of $11.3 million and an 8 percent increase in finance charges from the retailer’s in-house credit business of $2 million.
Same-store sales increased 1.9 percent for the period, fueled by strong sales of CE, particularly LCD TVs, video games and laptop computers, CFO Michael Pope said during an investor conference call this morning.
For the full fiscal year, net income declined 1.5 percent to $39.7 million and total revenue rose 8.3 percent to $824.1 million. Revenue results include an 8 percent increase in net sales of $54.1 million and an 11.2 percent increase in finance charges from the company’s in-house credit business of $9.4 million.
Same-store sales rose 3.2 percent for the 12 months.
“It is very satisfying to deliver earnings in the middle of the range we set at the beginning of the year … especially considering the challenging conditions in the retail marketplace we experienced this year,” said Thomas Frank, Sr., Conn’s chairman/CEO. “Though our credit portfolio statistics do not yet reflect all of the improvements we have made in our collection performance, I expect to see continued improvement over the next couple of quarters.”
During the conference call, president and chief operating officer Tim Frank said business rebounded “very well” in February following a “tough” January. Specifically, sales of LCD TVs last month rose 80 percent in units and 117 percent in dollars year over year, while majap sales increased 6 percent in units and 12 percent in dollars amid a challenging market for white goods.
“We made significant strides in turning major appliances around,” Frank, Sr. said.
Total sales in February were up nearly 6.5 percent on flat same store sales, and net sales quarter-to-date are ahead 3 percent on flat comps. The company is anticipating positive comps for March, Tim Frank said, noting that Conn’s has traditionally grown its business during economic downturns as customers invest in their homes and home entertainment. He added that the economic climate within the chain’s Gulf Coast trading areas remains robust, as reflected in the scarcity of qualified job candidates.
CE continues to fuel growth, Frank continued, and the promotional environment is beginning to stabilize, despite an extremely competitive marketplace. He said that Conn’s is able to contend with the competitive pressure through its membership in the NATM Buying Corp., which boasts some $3.8 billion in buying power.
The company opened seven new stores during the year, including four in the fourth quarter, and plans to open seven to 10 new stores this year beginning in April as commercial real estate becomes more affordable. Three of the new store openings are slated for Oklahoma, where the company’s lone location has exceeded expectations, Pope said.
Separately, Conn’s secured an increase in its revolving bank facility, from $50 million, to $100 million, to provide additional liquidity and support its expansion plans. All of the banks participating in the original $50 million commitment contributed a portion of the expanded credit line, the company said.
“We are very appreciative of the continued support by our long-time valued business partners and their recognition of the strength and growth opportunities of our company,” Frank noted.
Conn’s currently operates 69 stores in Texas, Louisiana and Oklahoma, including 22 in the Houston market, 17 in the Dallas/Fort Worth metroplex, 10 in San Antonio, five in Austin, four in Southeast Texas, one in Corpus Christi, three in South Texas, six in Louisiana and one in Oklahoma City. In the last three years, the company has financed approximately 59 percent of retail sales on average.