Conn’s Reports Mixed June Results, Names New CFO

Comps crimped by tighter underwriting, gaming and imaging exits
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Conn’s reported flattish comp sales and creeping consumer credit delinquency rates for June.

The Woodlands, Texas — Conn’s reported flattish comp sales and creeping consumer credit delinquency rates for June.

The multiregional mattress, furniture, majaps and CE retailer also appointed a new chief financial officer, Thomas Moran, filling a five-month vacancy.

Moran joins the company from boating equipment chain West Marine, where he held the same post. He succeeds interim chief financial officer Mark Haley, who returns to his previous role as chief accounting officer.

Haley assumed the interim role in December, succeeding Brian Taylor. Taylor left after less than three years on the job amid mounting delinquencies on Conn’s-issued consumer credit, which led to earnings losses.

Although reduced by tighter underwriting, late payments continue to plague the company, which was built upon a business model of easy access to in-house credit. Greater-than-60-day delinquency was 8.9 percent in June, compared with 8.2 percent last year, with a seasonal increase of 40 basis points from May 31, reported chairman/CEO Theo Wright.

Meanwhile, the stricter credit requirements are encumbering sales, and impacted June comps by about 2 percent, Wright said.

Total comps edged up 1.1 percent, compared with a year-ago increase of 11.2 percent, reflecting flat product sales and a 7.2 percent gain in repair service commissions.

Also suppressing same-store sales was the retailer’s exit from the video gaming and digital imaging categories, and its decision to drop certain tablet models. Excluding those factors, comps increased 5.1 percent, Wright reported.

  Broken out by product category, CE comps fell 11.4 percent, reflecting the product category exits and a 1.3 percent decline in TVs sales, with higher average selling prices (ASPs) offsetting lower unit volume.

Wright said sales of UHD TVs remain strong, although comps were impacted by a year-ago sales spike owing to the 2014 World Cup.

Home office comps fell 11.3 percent, but rose 1.3 percent excluding the impact from tablets.

Comps for furniture and mattresses rose 6 percent, while majaps turned in the best performance, with comps rising 9.8 percent despite lower ASPs.

Net sales rose 11.9 percent last month, reflecting the company’s ongoing multi-state buildout. The chain operates over 90 stores in 10 states stretching from Colorado to the Carolinas, and plans to open 15 to 18 new locations during the current fiscal year, which began in February.

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