Conn's, Inc. Provides Business Update Post Hurricane Harvey and Third Quarter Guidance
October 23 2017 - 5:24PM
Conn's, Inc. (NASDAQ:CONN), a specialty retailer
of furniture and mattresses, home appliances, consumer electronics
and home office products, and provider of consumer credit, today
provided an update on the impact from Hurricane Harvey and
announces financial guidance for the third quarter ended October
31, 2017.
“Conn’s has been part of the Texas community for
over 125 years, and I am extremely proud that we are helping
support our employees, customers, friends, and neighbors as they
rebuild from the devastation caused by Hurricane Harvey.
Conn’s has raised over $500,000 in donations for impacted employees
and local Texas charities,” commented Norm Miller, Conn's Chairman,
Chief Executive Officer and President. “Current business trends
indicate that Hurricane Harvey’s impact on third quarter results
will be limited, reflecting the resiliency of our business model
and the value we provide customers. I remain encouraged by
the long-term direction we are headed and continue to anticipate
full-year profitability for fiscal year 2018.”
Same store sales during August and September
were affected by approximately 100 lost selling days and reduced
traffic associated with Hurricane Harvey. Beginning in
mid-September, Conn’s started to experience positive sales trends,
as sales within Southeast Texas benefited from rebuilding
activities. October’s month-to-date same store sales in the
markets impacted by Hurricane Harvey are up over 15.0%. In
addition, same store sales trends in markets outside of Hurricane
Harvey have started to improve as the company fully lapped
meaningful underwriting refinements made last fiscal year.
October month-to-date same store sales in markets outside Southeast
Texas are down approximately -7.0%. As a result, the company
expects same store sales for the third quarter of fiscal year 2018
to be down -5.0% to -9.0%.
Retail gross margin remains strong, and for the
third quarter of fiscal year 2018 the company anticipates retail
gross margin to be between 39.0% and 39.5%. For the third
quarter of fiscal year 2018, selling, general and administrative
(SG&A) expenses are expected to be between 31.0% and 32.5% of
total revenues. SG&A expenses for the third quarter of
fiscal year 2018 will include approximately $1.5 million of
one-time hurricane related costs.
The turnaround underway in credit continues and
has provided the company with flexibility to withstand Hurricane
Harvey’s impact on credit results. In addition, the
requirement that all in-house credit customers have property
insurance has insulated the company’s net exposure to credit losses
from Hurricane Harvey, as well as provided protection for
customers. Provision for bad debts for the third quarter of
fiscal year 2018 is expected to be between $56.0 million and $61.0
million. Conn’s believes this captures the estimated losses
associated with loans effected by the storm.
Finance charges and other revenues for the third
quarter of fiscal year 2018 are expected to be between $80.0
million and $83.0 million, driven by higher interest income, and
partially offset by lower insurance-related income as a result of
higher claims associated with Hurricane Harvey. Interest
expense for the third quarter of fiscal year 2018 is expected to be
between $18.5 million and $19.3 million.
Conn’s will report third quarter financial
results in early December.
About Conn's, Inc.
Conn's is a specialty retailer currently
operating 116 retail locations in Alabama, Arizona, Colorado,
Georgia, Louisiana, Mississippi, Nevada, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia.
The Company's primary product categories include:
- Furniture and mattress, including furniture and related
accessories for the living room, dining room and bedroom, as well
as both traditional and specialty mattresses;
- Home appliance, including refrigerators, freezers, washers,
dryers, dishwashers and ranges;
- Consumer electronics, including LED, OLED, Ultra HD, and
internet-ready televisions, Blu-ray players, home theater and
portable audio equipment; and
- Home office, including computers, printers and accessories
Additionally, Conn's offers a variety of
products on a seasonal basis. Unlike many of its competitors,
Conn's provides flexible in-house credit options for its customers
in addition to third-party financing programs and third-party
lease-to-own payment plans.
CONN-G
Investor Contact: S.M. Berger & Company Andrew Berger, (216)
464-6400
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