Conn’s said its year-long focus on creating a “strong credit platform” for its in-house lending unit is beginning to show results.
The effort, which toppled the chain’s previous management team, came amid growing losses due to rising delinquency rates, higher bad-debt provisions, and tighter requirements for consumer credit.
In announcing the company’s fourth-quarter and full fiscal-year results today, chairman, president and CEO Norm Miller said the credit operation “continues to benefit from the structural changes we are making to increase yield, reduce losses and improve credit segment profitability.”
Indeed, net loss for the fourth quarter, ended Jan. 31, narrowed to $74,000, compared with a net loss of $3.8 million for the prior three-month period, and finance charges and other income was the second-highest quarterly result in Conn’s history as a public company.
The changes include outsourcing its 0 percent finance programs to Synchrony and implementing a new direct loan program that has raised the annual percentage rate (APR) on new originations.
Miller said all originations in Texas fell under the program in the fourth quarter, followed by Louisiana in early March. As a result, over 80 percent of current originations now have a weighted average interest rate of over 28 percent, compared with almost 22 percent in September, he noted.
Still, the furniture, bedding, majap and CE chain is on an uphill climb. Total fourth-quarter revenue fell 5.2 percent, to $432.8 million, while net sales of products and services plus commissions from service contracts slipped 5.5 percent to $355.9 million.
Comp sales for the period, which included the holiday selling season, sank 8.9 percent, dragged down by a 16-percent drop in home office revenue and a 5.8 percent decline in appliance dollars.
Conn's Q4 Retail Results
But Miller said the retail business enjoyed a strong fourth quarter despite an approximately 1 percent impact from tighter underwriting rules.
The results are the last that can be attributed to Conn’s previous retail team, led by David Trahan and his son Aaron. The elder Trahan retired Jan. 1 after three decades with the company, and Aaron left after 14 years to join hhgregg as chief merchandising officer.
The division is now headed by retail president
, formerly store operations executive VP at TMX Finance.