Net income for the three months ended July 31 skyrocketed nearly 300 percent to $17 million, thanks to improved credit segment performance, record retail gross margin of 41.4 percent, and higher sales.
Total retail revenues rose 3.5 percent to $296.4 million, aided by the addition of two new stores in Texas during the first half of the fiscal year, and the first positive, albeit slight, same-store sales in three years, of 0.3 percent.
"We achieved many operating and financial milestones during the second quarter," said chairman/CEO Norm Miller. "The initiatives to drive retail growth are starting to take hold ...[and] the momentum in our business is encouraging."
But despite the gains, Conn's cut loose retail president/COO Coleman "CR" Gaines. Miller has temporarily assumed the post until a successor can be found.
"For Conn’s to be successful, we need to improve our retail execution and produce more consistent results throughout our retail operation," Miller said on an earnings call.
Breaking out the sales results by category:
- CE comps rose 5.3 percent, unit volume increased 2.2 percent and average sales price (ASP) rose 3 percent, aided by the addition of gaming bundles;
- Majap comps rose 0.4 percent, unit volume declined 6.5 percent and ASP rose 7.4 percent, with Miller citing appliance industry headwinds due to recently imposed tariffs; and
- Home office comps rose 8.5 percent, unit volume increased 13.7 percent and ASP decreased 4.5 percent, following a category refresh that revamped the assortment to fit Conn's better-best retail strategy and to offer products "more aligned with customer preferences," Miller said.
Furniture and mattress comps slipped 2.3 percent on unit volume declines of 4.3 percent and 13.8 percent, respectively, while ASP rose 2.5 percent for furniture and 11.8 percent for mattresses.
Looking ahead, the company plans to open a total of seven to nine new stores during its current fiscal year. It currently operates 119 showrooms in 14 states.
In other Conn's news, the retailer has promoted chief credit officer John "JD" Davis to credit and collections president. In making the announcement, Miller credited Davis with "playing a meaningful role in leading our credit segment transformation."