Conn’s, Inc. (NASDAQ: CONN), a specialty retailer of consumer
electronics, home appliances, furniture, mattresses, computers and
lawn and garden products, today announced its retail segment net
sales results for the quarter ended January 31, 2012.
Retail segment net sales for the quarter ended January 31, 2012,
of $189.5 million, increased $7.6 million, or 4.2%, compared to the
quarter ended January 31, 2011. Retail segment net sales represent
total product sales, repair service agreement commissions
(excluding the impact of repair service agreement cancellations due
to credit charge-offs) and service revenues. Same store sales
(sales recorded in stores operated for the entirety of both
periods, which excludes nine stores that have been closed, one
store in the process of being closed and two stores with leases
that expired during fiscal year 2012) increased 12.1% for the
quarter ended January 31, 2012, compared to the same quarter in the
prior fiscal year. Factors impacting the Company’s sales
performance during the quarter were as follows:
- Continued increases in average selling
prices in all major categories;
- Improved and expanded product selection
in the Furniture and Mattresses category; and
- Same store sales benefitted from the
store closures completed during fiscal year 2012, as the Company
has been able to retain a portion of the sales from the closed
locations.
“Despite weakness in the consumer market for televisions, we
were pleased to deliver double digit same store sales growth for
the second quarter in a row. In addition to the same store sales
increase, we also increased our retail segment gross margin
percentage by 500 basis points, or 21%,” commented Theodore Wright,
Conn’s CEO.
The retail segment gross margin, which includes gross profit
from both product and repair service agreement sales, was
approximately 29.0% for the quarter ended January 31, 2012,
compared to 24.0% in the quarter ended January 31, 2011. The
following table presents net sales by category and changes in net
sales for the quarter:
Quarter ended
January 31, Same store 2012 % of Total
2011 % of Total Change % Change %
change (dollars in thousands) Consumer electronics $ 76,754
40.5 % $ 90,707 49.9 % $ (13,953 ) -15.4 % -9.8 % Home appliances
44,798 23.6 % 38,767 21.3 % 6,031 15.6 % 21.2 % Furniture and
mattresses 27,746 14.7 % 20,160 11.1 % 7,586 37.6 % 46.0 % Home
office 18,777 9.9 % 15,200 8.3 % 3,577 23.5 % 29.8 % Other
5,161 2.7 % 4,117 2.3 % 1,044 25.4 % 33.1 %
Total product sales 173,236 91.4 % 168,951 92.9 % 4,285 2.5 % 9.0 %
Repair service
agreement commissions
12,629 6.7 % 9,179 5.0 % 3,450 37.6 % 38.5 % Service revenues
3,596 1.9 % 3,778 2.1 % (182 ) -4.8 % Total
net sales $ 189,461 100.0 % $ 181,908 100.0 % $ 7,553 4.2 %
12.1 %
Note: The amounts in the table reflect the
results of the Company’s retail segment.
The following is a summary of some of the items impacting the
Company’s key categories during the quarter, compared to the same
quarter in the prior fiscal year:
- Consumer electronics category sales
decreased primarily as a result of a 30.6% decrease in the unit
sales of televisions, while the average selling price increased
23.4%. The unit sales decrease was driven largely by the Company’s
decision not to compete for low-priced, low-margin sales during the
fourth quarter, in general, and specifically on Black Friday. Also,
contributing to the decrease was a reduction in gaming hardware and
software sales, partially offset by an increase in home theater
sales;
- Home appliance category sales increased
during the quarter on a 21.5% increase in the average selling
price, partially offset by a 3.3% decrease in unit sales. Laundry
sales were up 25.1%, refrigeration sales were up 13.3% and cooking
sales were up 13.6%;
- The growth in furniture and mattress
sales was driven by enhanced displays and product selection, and
increased promotional activity, resulting in a 20.2% increase in
unit sales of furniture and mattresses, combined with a 16.2%
increase in the average selling price; and
- Home office sales grew primarily as a
result of the expansion of tablet sales, and a 25.3% increase in
the average selling price of laptop and desktop computers and
netbooks, as the unit sales of those products decreased by
12.5%.
All of the above amounts are preliminary estimates and are
subject to change upon completion of the Company’s quarterly
financial statement closing process. Actual results may differ
significantly from the preliminary estimates.
The Company has posted an updated investor presentation on its
website at ir.Conns.com. The Company will host a conference call
and audio webcast on Tuesday, April 3, 2012, at 10:00AM, CT, to
fully discuss its earnings and operating performance for the
quarter. The webcast will be available live at ir.Conns.com and
will be archived for one year. Participants can join the call by
dialing 877-754-5302 or 678-894-3020.
About Conn’s, Inc.
The Company is a specialty retailer currently operating 65
retail locations in Texas, Louisiana and Oklahoma: with 22 stores
in the Houston area, 15 in the Dallas/Fort Worth Metroplex, seven
in San Antonio, three in Austin, five in Southeast Texas, one in
Corpus Christi, four in South Texas, six in Louisiana and two in
Oklahoma. The Company’s primary product categories include:
- Home appliances, including
refrigerators, freezers, washers, dryers, dishwashers and
ranges;
- Consumer electronics, including LCD,
LED, 3-D, plasma and DLP televisions, camcorders, digital cameras,
Blu-ray and DVD players, video game equipment, portable audio, MP3
players and home theater products;
- Furniture and mattresses, including
furniture for the living room, dining room, bedroom and related
accessories and mattresses; and
- Home office, including desktop,
notebook, netbook and tablet computers, printers and computer
accessories.
Additionally, the Company offers a variety of products on a
seasonal basis, including lawn and garden equipment, and continues
to introduce additional product categories for the home to help
respond to its customers' product needs and to increase same store
sales. Unlike many of its competitors, the Company provides
flexible in-house credit options for its customers, in addition to
third-party financing programs and third-party rent-to-own payment
plans. In the last three years, the Company financed, on average,
approximately 60% of its retail sales under its in-house financing
plan.
This press release contains forward-looking statements that
involve risks and uncertainties. Such forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "should," "anticipate," or "believe," or the negative
thereof or variations thereon or similar terminology. Although the
Company believes that the expectations reflected in such
forward-looking statements will prove to be correct, the Company
can give no assurance that such expectations will prove to be
correct. The actual future performance of the Company could differ
materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to:
- the Company's growth strategy and plans
regarding opening new stores and entering new markets;
- the Company's intention to update,
relocate or expand existing stores;
- the effect of closing or reducing the
hours of operation of existing stores;
- the Company's estimated capital
expenditures and costs related to the opening of new stores or the
update, relocation or expansion of existing stores;
- the Company's ability to introduce
additional product categories;
- sales trends in the home appliances,
consumer electronics and furniture and mattress industries and the
Company's ability to respond to those trends;
- the pricing actions and promotional
activities of competitors;
- relationships with the Company's key
suppliers;
- delinquency and loss trends in the
receivables portfolio;
- the Company’s ability to offer flexible
financing programs;
- changes in the Company’s collection
practices and policies;
- the Company’s ability to amend, renew
or replace its existing credit facilities before the maturity dates
of the facilities;
- the Company's ability to fund
operations, debt repayment and expansion from cash flow from
operations, borrowings on its revolving lines of credit and
proceeds from securitizations and from accessing debt or equity
markets;
- the ability of the Company to obtain
additional funding for the purpose of funding the receivables
generated by the Company;
- the ability of the Company to maintain
compliance with the covenants in its financing facilities or obtain
amendments or waivers of the covenants to avoid violations or
potential violations of the covenants;
- reduced availability under the
Company’s credit facilities as a result of borrowing base
requirements and the impact on the borrowing base calculation of
changes in the performance or eligibility of the customer
receivables financed by that facility;
- the ability of the financial
institutions providing lending facilities to the Company to fund
their commitments;
- the effect on borrowing costs of
downgrades by rating agencies or changes in laws or regulations on
the Company’s financing providers;
- the cost of any amended, renewed or
replacement credit facilities;
- interest rates;
- general economic and financial market
conditions;
- weather conditions in the Company's
markets;
- the outcome of litigation or government
investigations;
- changes in the Company's stock price;
and
- the actual number of shares of common
stock outstanding.
Further information on these risk factors is included in the
Company's filings with the Securities and Exchange Commission,
including the Company's annual report on Form 10-K filed on April
1, 2011. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Except as required by law, the Company is not
obligated to publicly release any revisions to these
forward-looking statements to reflect the events or circumstances
after the date of this press release or to reflect the occurrence
of unanticipated events.
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