Conn's Q1 Sales Slip 4%

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Beaumont, Texas - Conn's said net retail segment sales declined 3.9 percent to $157.2 million during its first fiscal quarter ended April 30.

Comparable store sales, excluding five locations that are being shut and two that are coming off lease this year, also decreased 3.9 percent. Conn's closed one store during the quarter, in Austin, Texas, when its lease expired last month.

Gross margin, including gross profit from sales of products and service agreements, rose in most categories to hit 28 percent for the 75-store CE, appliance and furniture chain, up from 23.9 percent during the year-ago period.

Broken out by category, CE sales declined 4.5 percent during the quarter, largely on a 20.5-percent decline in the average selling price (ASP) of TVs, even as unit sales increased 19.4 percent on a 128.8 percent spike in unit sales of plasma displays. Weaker camera and camcorder sales also contributed to the decline, which was partially offset by higher sales of video game hardware, MP3 players and accessories, and the addition of DJ systems to the assortment.

Within home office, sales declined 19.2 percent primarily as a result of a 15.9-percent drop in unit sales of laptop and desktop computers, and a 3.8 percent decrease in ASPs. Nevertheless, Conn's said it drove an increase in the amount of gross profit generated by this category.

Sales of major appliances fell 7.5 percent on lower unit sales and ASPs, with laundry segment sales down 11.2 percent, refrigeration down 6.7 percent, and cooking down 17.7 percent. In contrast, room air sales soared 96.4 percent during the quarter.

Service revenues decreased 18.2 percent as the company increased its use of third-party servicers during the quarter "to provide timely product repairs for its customers," Conn's said. Commission from service agreements declined 8.6 percent.

In terms of mix, CE represented 36.3 percent of total sales, majaps 28.7 percent, home office 6.7 percent and repair services 8.2 percent during the quarter, with the balance comprised of furniture, mattresses and lawn and garden equipment.

The company will report its full first-quarter results on May 25.


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