BEAUMONT, TEXAS —
Conn’s, the multiregional
CE and appliance chain, trimmed its losses in its fiscal
third quarter but reported improved Black Friday sales.
The fiscal third-quarter loss of $7.8 million compared
with a year-ago loss of $19.3 million. Conn’s
said it trimmed its losses by cutting expenses and
increasing gross margins, although the improvement
also reflects one-time charges taken during the same
period last year.
Net sales declined 15.2 percent to $136.8 million,
and finance charges and other income decreased 8.6
percent to $33 million for the three months, ended
Oct. 31. Same-store sales fell 16.3 percent, on top of
a 9.3 percent decrease during the year-ago quarter.
Broken out by category, major CE, comprised largely
of TVs, fell 24.7 percent in dollar volume during the
quarter, and was down 14 percent in units amid a 13
percent decline in average selling prices (ASPs).
Major appliance revenue dropped 13 percent year
over year during the quarter, despite a surge in room
air, and track sales, comprised of smaller electronics,
decreased 2.8 percent as gains in MP3 players,
compact audio systems and accessories were offset
by weakness in gaming, computers, GPS devices and
Conn’s said sales were impacted by weak local
economies, tighter customer credit requirements,
competitive pricing and capital limitations.
The latter was corrected with the completion of a refinancing
plan that provides $500 million in capital and
extends the company’s loans out to 2013 and 2014.
The infusion will afford Conn’s “greater flexibility” in
its consumer credit offers, chief financial officer Mike
Pope said during a conference call. Conn’s is launching
a direct-mail marketing campaign to promote them
and is also rolling out a rent-to-own financing option
Sales improved in November, beginning with the
second week of the month, president/CEO Tim Frank
said on the call. Total November sales declined 1 percent
and same-store sales slipped 1.4 percent, as
ASPs fell 13 percent in CE, 6.5 percent in majaps and
1 percent to 2 percent in laptops.
Sales soared 13.1 percent on Black Friday and edged up
3.8 percent on the following Saturday and Sunday, Frank
said. Conn’s enjoyed higher ASPs on Black Friday weekend
over last year thanks to improved merchandising performance
and a better mix of fully featured large-screen TVs — including
a 55-inch 3D LED TV that was sold in a bundle and “blew out
the door,” making it a top weekend SKU, Frank said.
Despite plentiful vendor inventory, the promotional environment
has moderated following two years of rampant
discounting, particularly in appliances, although the macroeconomic
outlook remains challenging. Challenges to
local economies within Conn’s trading areas also continue,
but are stabilizing, he said.
Broken out by business segment, retail losses before
income taxes were $2.2 million for the quarter, compared
with a year-ago loss of $19.2 million that included a goodwill
impairment charge of $9.6 million and a $4.1 million
litigation reserve adjustment.
The credit segment’s loss before income taxes was
$5.6 million for the quarter, compared with a year-ago
loss of $0.1 million, attributed to reduced interest earnings,
higher collection expenses and borrowing costs,
and a $2.9 million write-off of costs of un-completed financing
Conn’s operates 76 retail locations in Texas, Louisiana
and Oklahoma, including 23 stores in the Houston
area, 20 in the Dallas/Fort Worth market, nine in San
Antonio, five in Austin, five in southeast Texas, one in
Corpus Christi, four in south Texas, six in Louisiana,
and three in Oklahoma.