Conn’s Improves Q3 Earnings

Profits improved for Conn’s in the third quarter ended October 31, as the company posted net income of $14.6 million, or 45 cents per diluted share, versus $1.6 million, or five cents per diluted share, in the year-earlier period.

Adjusted net income, excluding one-time charges, was $18.9 million, or 59 cents per diluted share, versus $5.6 million, or 18 cents per diluted share, in the year-prior quarter. Diluted earnings per share topped a MarketBeat-published analyst consensus estimate by a penny.

Company comparable sales decreased 4.4% and comp product sales slipped 4.2%. On a category basis, furniture and mattress comps slid 6.6%, home appliance comps slid 6.4%, consumer electronics comps slid 0.2%, home office comps gained 9.9% and other segment comps slipped 26.6%.

Net sales were $283.9 million versus $291.8 million in the year-previous quarter, while total revenues, including finance and other charges, were $373.8 million versus $373.2 million in the 2017 period. Operating income was $35.5 million compared with $20.9 million in the year-before quarter.

“Fiscal year 2019 is shaping up to be one of the best years of profitability in Conn’s 128-year history,” said Norm Miller, Conn’s chairman and CEO. “This is primarily due to our growing credit spread and strong retail gross and operating margins. From a retail perspective, even with Hurricane Harvey’s impact on same store sales, we achieved a retail operating margin of 12.4% during the third quarter of fiscal year 2019. Our successful credit transformation combined with the investments underway to maximize our retail performance have created the strongest foundation since I came to the company over three years ago. We are well positioned headed into the fourth quarter as November same store sales increased 8.5% in our non-Harvey markets. Total same store sales increased 3.6% in November, even as we lapped strong sales in the prior year in our Hurricane Harvey impacted markets. As we plan for our next fiscal year, we expect stronger retail growth driven by improving same store sales trends, coupled with opening 12 to 15 new Conn’s HomePlus locations.”

Conn’s opened three HomePlus locations in Virginia during the third quarter, bringing total store count to 121.