NEW YORK — First-quarter financial results from two multiregional CE and appliance chains this month provide starkly different snapshots of the marketplace.
For Texas-based Conn’s, sales are on the ascent led by strength in appliances, UHD TVs and home furnishings.
But Indianapolis’ hhgregg is still finding its footing, reporting sales declines across majaps and CE, and an $8.6 million loss for quarter.
At Conn’s, net retail sales rose 12.7 percent to $325 million for the three months ended July 31, as it continues to open stores in new and existing markets. The company currently operates 95 big-box locations stretching from Colorado to the Carolinas.
But the real story lies in its same-store sales. Those were up 3.1 percent for the quarter, weighed down only by the retailer’s exit from the video game and digital imaging categories, and its decision to drop certain tablet lines. Excluding those changes, apples-to-apples comps increased 6.7 percent.
The momentum was even stronger in July, a traditionally slow month for CE, when TV comps increased 6.9 percent. Conn’s attributed the gain to UHD TV, whose higher average selling prices (ASPs) helped lift CE comps 6.1 percent (excluding the exited categories), as the advanced displays come to comprise a larger chunk of its video business.
But all is not rosy at company’s The Woodlands headquarters. The retailer’s in-house credit unit, which is the bedrock of its business model but also the cause of recent earnings declines, remains a pain point as consumers continue to struggle to make their payments. Indeed, despite tightening its credit requirements, the 60-plus-day delinquency rate at Conn’s continued to creep up, rising to 9.2 percent from 8.7 percent last year as of July 31.
Meanwhile, hhgregg said cost-cutting and revenuegenerating initiatives contributed to improving sales and traffic trends in the first quarter, and a narrowing of its losses from last year.
Still, net sales slipped 6.6 percent to $441.1 million and comps decreased 6.3 percent on same-store sales declines in appliances (-2.2 percent), CE (-8.3 percent) and computers and tablets (-42 percent). Majaps now comprise fully 59 percent of the company’s sales mix, compared to 30 percent for CE.
The total comp decline was compounded by the chain’s exit from the mobile and fitness categories, but was offset by a 12.1 percent comp gain in furniture and mattresses.
Finances were bolstered by an 80-basis-point increase in gross profit margin. The company also lowered its advertising expense reduced wages; and saw a decrease in employee benefits.
All told, the company is aiming for $50 million in cost savings in the current fiscal year.