BEAUMONT, TEXAS —
A reinvigorated Conn’s
reported fiscal fourth-quarter profits of $7.7 million,
compared with a year-ago loss of $3.6 million.
Total revenue for the three months, ended Jan. 31,
increased 3.7 percent to $226.7 million, and samestore
sales rose 12.1 percent.
The regional furniture, majap and CE chain attributed
the gains to a greater mix of higher-margin furniture
and mattresses, higher average selling prices
across all core categories, and increased sales of
extended-service contracts.
Revenue for the retail segment rose 4.5 percent in the
quarter and adjusted operating income rocketed 343
percent to $9.3 million, excluding $5.1 million in costs
for closing five underperforming stores in January.
A sixth store, located in Dallas, is set to close during
the second quarter.
On a conference call last week, retail president David
Trahan said furniture and bedding was the company’s
biggest gainer for the quarter with a 20 percent
increase in unit sales, compared to a 3 percent
decline in majap volume and a 31 percent drop-off in
CE units.
The latter reflected the decision to eliminate lowmargin
SKUs from the mix, and was offset by a 23
percent increase in average CE selling prices.
Operating income for the credit segment rose 82
percent to $12.2 million thanks to reduced portfolio balances, tighter credit requirements, rising interest
yields and lower servicing costs, the company said.
What’s more, fully 84.3 percent of sales were
generated by an extended payment option during
the quarter, up from 65.9 percent last year.
For the full fiscal year, Conn’s had a net loss of
$3.72 million on total revenue of $792.3 million,
compared with the prior year’s net loss of $1.97
million on sales of $808.7 million.
“We are pleased to report improved profitability in
both our credit and retail segments,” said chairman/
CEO Theo Wright, who assumed the top management
slot 14 months ago following a string of consecutive
quarterly losses and comp sale declines.
The positive trend is continuing into the current
quarter, he noted, with combined February and
March samestore
sales
growing 16.1
percent and retail
gross margin
outpacing
Q4 levels.
“Sales and
gross margins
are increasing,”
he said. “We
are on track
with our store
opening plans” — which include five to seven locations
in new markets one new state this year — “and
are looking forward to returning to unit growth after
a period of retrenchment.”
The company is also rolling out a new store format
that provides a slightly larger footprint, devotes
more floor space to its burgeoning furniture
and mattress business, and has been outperforming
the company as a whole in test markets. Six
of Conn’s 65 stores have been remodeled to date,
and another 14 are expected to be retrofit by the
end of the year.
On the earnings call, Wright said the company
has also eliminated sales floor negotiations with
customers and continues to emphasize better
goods with higher average selling prices. The improved
results “should be sustainable,” he said,
and forecasted mid- to high-single-digit comp increases
for the current year.
