Conn's Comps Hit Snag

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THE WOODLANDS, TEXAS — Severe winter weather, tighter consumer credit, tough prior-year comparisons and the West Coast port disruptions took a toll on Conn’s February same-store sales.

Comps fell 5.8 percent last month, compared with a year-ago gain of nearly 15 percent, while net retail sales rose 4.9 percent.

Leading the decline were seasonal and catchall “other” products, down nearly 30 percent.

They were followed by home office, down 14.4 percent, and CE, which decreased 7.6 percent year over year, including a 9 percent decline for TV.

Unit volume was also down for both categories, although the declines were partially offset by higher average selling prices, Conn’s chairman/CEO Theo Wright said.

Furniture and mattresses declined 5.7 percent, comprised of an 8 percent decline for the former due to inventory tightness, and a 2.5 percent increase in the latter. The disparity speaks to the impact of the port labor dispute, Wright said, as Conn’s furniture inventory is largely imported while its mattresses are sourced domestically.

Delays in customer deliveries due to port backlogs and bad weather rose 37 percent in February to $3.6 million, which was not recorded as sales.

He added that that inventory availability is expected to improve now that a contract agreement was reached, but isn’t expected to return to normal until after March.

Comps for service-contract commissions slipped 1 percent, and majap comps edged up 0.8 percent on gains in unit volume.

Wright said extreme weather also disrupted store traffic, while tighter underwriting by Conn’s in-house consumer credit division had a 5 percent to 7 percent impact on sales during the month.

At the same time, the stricter credit provisions resulted in a 50-basis-point decrease in delinquencies of 60 days or more. Rising delinquencies amid the tough economy had pushed the company into the red last year, prompting the departure of chief financial officer Brian Taylor and talk of a credit segment spinoff or even the sale of the company, although Conn’s appears to have turned a corner in its credit crisis.


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