With its in-house credit business back on track, Conn’s has seemingly completed its turnaround under chairman/CEO Norm Miller.
Fueled by “our growing credit spread and strong retail gross and operating margins,” Miller reported a powerful third quarter, ended Oct. 31, that generated $14.6 million in net income, an increase of 813 percent over last year.
Retail revenue, impacted by the after effects of Hurricane Harvey, slipped 2.7 percent, to $291.9 million, with same-store sales falling 4.4 percent.
Miller noted that comp sales at Harvey-impacted stores declined nearly 12 percent during the quarter, but that the chain still achieved a retail operating margin of 12.4 percent and record third-quarter retail gross margin of 41.2 percent.
He added that the trend is improving, with November comps up 3.6 percent, and non-Harvey markets ahead 8.5 percent year over year.
“We are well positioned headed into the fourth quarter,” he said.
On the product front, home office put in the strongest third-quarter showing, up 24.5 percent in unit volume and 10 percent in comp sales, partially offset by an 11.7 percent decrease in average selling price (ASP).
Comps were essentially flat for CE, but otherwise declined in every other core category, including service agreement commissions (down 6.3 percent); appliances (down 6.4 percent); and furniture and mattresses (down 6.6 percent).
Nevertheless, Miller said the current fiscal year is “shaping up to be one of the best years of profitability in Conn’s 128-year history,” giving the company the confidence to possibly double the number of new store openings next year to between 12 and 15, up from this year’s seven new locations.
The retailer currently operates 122 HomePlus stores across 14 states.