Conn's Reports Q3 Loss, Names Wright CEO


Beaumont, Texas - Conn's reported a $12.7 million loss for its fiscal third quarter and appointed chairman Theodore Wright president/CEO.

The multi-regional CE, majap and furniture retailer said the loss stemmed from $19.2 million in pre-tax charges, including $400,000 for store closures, $4.7 million in write-offs of ageing inventory, and $14.1 million after new accounting procedures were adopted following a troubled debt restructuring.

The company lost $4.8 million during the year-ago quarter.

Total revenue rose 5.2 percent for the three months ended Oct. 31, to $179.5 million. Retail revenue increased 12.3 percent to $155 million and same-store sales soared 28.2 percent. Excluding the pre-tax charges, the retail segment's adjusted operating loss was $800,000, down from $3.5 million for the year-ago quarter, as adjusted gross margin rose to 28.2 percent from 25.8 percent last year on improved gross margins in home office and furniture, higher service attachment rates, and increased sales of higher-margin furniture and mattresses.

"I am encouraged by our sales performance, as we returned to positive same-store sales during the quarter," said Wright, who had served as acting president/CEO since February. "The improvements in our retail operating performance carried over into the month of November, when we experienced a same-store sales increase of 10.5 percent."

Driving the retail gains were increases of 11.6 percent in product sales, 28.1 percent in service contract commissions and 4.8 percent in service repairs.

Product sales benefitted from higher average selling prices (ASPs) in all major categories and increased unit sales of furniture, mattresses, major appliances and CE.

Looking ahead, the company anticipates same-store sales will be up by the low to mid-single digits for the full fiscal year ending Jan. 31, 2012, and that between five and seven new locations will have been opened in new markets.

Conn's currently operates 70 stores in Texas, Louisiana and Oklahoma, and finances about 60 percent of its retail sales through its in-house credit operation.

Wright, a former president of Sonic Automotive, a multi-state car dealership, has served as Conn's interim president/CEO since February, succeeding Tim Frank. He joined the board in 2003, was elected chairman in 2010, and was sat on the company's audit and compensation committees until last February.  

"I am excited about the company's progress to date and my opportunity to contribute to its success over the long term," Wright said in a statement. "I have a strong belief in the business model and the value it can deliver to our customers and shareholders."


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