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.