Conn’s Registers Q2 Profit as Credit Segment Improves

September 7, 2017  by Larry Thomas in Economic News, Industry   

The company erased the red ink by slashing the operating loss in its credit business to $2.11 million. In the same quarter last year, the loss totaled $29.4 million.

In addition, the retailer boosted the gross margin in its retail business to 39.8% from 37.1% in the same quarter a year ago.

“This achievement is the direct result of Conn's differentiated and highly profitable retail model, the initiatives implemented to turn around our credit business, and the talented and experienced team we have assembled," said Norm Miller, Conn's chairman, CEO and president. "Conn's credit business continues to improve as recent originations become a larger percentage of the portfolio balance, and benefit from tighter underwriting standards and higher yields.”

He said the company’s underlying retail business model remains strong, and said same-store sales should improve now that its stricter credit standards have been in place for more than a year.

In the most recent quarter, furniture and mattress sales fell 9.7% to $95.3 million and accounted for 33.3% of total retail sales. Appliance sales were down 12.1% to $89.1 million and accounted for 31.1% of total retail sales.

Miller said Conn’s, which is based near Houston, lost about 100 selling days in August as several of its Texas and Louisiana stores, as well as distribution centers in Houston and Beaumont, Texas, were closed for several days due to Hurricane Harvey.

All operations have re-opened, but he said Conn’s won’t provide earnings and revenue estimates for the current quarter due to the short-term uncertainty created by the storm.

For the six months ended July 31, total revenues fell 8.2% to $722.5 million, and net income totaled $1.69 million or 5 cents per share. In the first half of the previous fiscal year, the company had a net loss of $21.7 million or 71 cents per share.