Conn’s plans new stores in Phoenix following second quarter results
THE WOODLANDS, Texas — Regional consumer electronics retailer Conn’s plans to more than double its footprint in Phoenix following second quarter results, which showed an 18.4% increase in same-store sales.
The company reported revenues of $224 million for the quarter ended July 31, an increase of 30.3% from $172 million for the prior-year quarter. Sales in all product categories increased, driven by the 18.4% increase in same-store sales and new store openings. With new store openings and the remodeling of existing stores, 31 stores were operating in the Conn’s HomePlus format for the quarter. The company operates a total of 76 stores and plans to add four locations in Phoenix to the three it already has there.
Home appliance unit volume increased 10%. Laundry sales increased 26%, refrigeration sales were up 23% and cooking sales rose 20%. Furniture unit sales increased 47% and the average selling price was up slightly. Mattress unit volume increased 38% and average selling price was up 11%. Television sales rose 15%, with same store growth in units and average selling price, and tablet sales increased 52% and computer sales were up 20%.
Retail gross margin was 38.3% for the quarter, up from 34.1% in the prior-year quarter. Margins expanded in all product categories. Product margin on furniture and mattress sales increased 330 basis points from the prior-year period to 47% of sales. Furniture and mattress sales contributed 25% of the total product revenue in the current period and generated 35.3% of the total product gross profit.
While sales results were strong, weakness in the company’s credit segment negatively affected profits.
“The performance of our credit segment for the second quarter was below our expectations due to short-term execution issues in our collection operations,” said Theodore M. Wright, chairman and CEO.
“Corrective actions were taken and negative delinquency trends rapidly reversed. Early stage delinquency at the end of August had declined 12% from peak levels earlier in the month. At August 31, early stage delinquency was below the levels experienced at the end of each of the past nine quarters. We expect further improvement in overall delinquency rates over the next several months. Despite the challenges in our collections operations in the second quarter, we are reaffirming our guidance for the year.”