Conn's posts $11.8 million profit as furniture, bedding sales grow
Clint Engel -- Furniture Today, December 3, 2012
THE WOODLANDS, Texas — Furniture, electronics and appliance retailer Conn's posted net income of $11.8 million or 35 cents per share in its fiscal third quarter as higher margins and a strong furniture and bedding business continued to pay off.
The profit for the 66-store retailer in the quarter ended Oct. 31 reversed a loss of $12.7 million, or 40 cents per share, for the same period a year ago, which included a pretax $14.1 million charge related to "required adoption of accounting guidance related to troubled debt restructuring," as well a pretax $4.7 million charge for inventory reserves related to aged product and a $400,000 charge related to store closings.
Charges in the most recent quarter included an $800,000 pretax expense associated with extension and expansion of its revolving credit facility, and $600,000 related to the move of its corporate office to The Woodlands, Texas.
Total revenues increased 10.6% to $206.4 million, from $186.6 million, and same store sales rose 12.6% on top of a same-store sales increase of 18.9% a year ago.
Retail revenues for the quarter jumped 8.2% to $167.7 million, driven largely by a 31.7% increase in furniture and mattress sales. Retail gross margin jumped to 35.5% from 25.3% for the same period a year ago, when the company adjusted its inventory valuation reserve.
In a release, Conn's said the margin improvement was across all categories and "driven by the focus on higher price-point, higher-margin product and sourcing opportunities."
"Growth in higher-margin furniture and mattress sales outpaced the overall increase realized in the other product categories, also favorably impacting retail gross margin," the company said.
Conn's Chairman and CEO Theodore Wright said Conn's HomePlus store in Albuquerque, N.M., has performed well since its opening last month, and added that the company will open three more stores this week.
"We continue to see sales growth in our existing store base," he said, adding that November same-store sales rose 6% on top of same-store sales growth of 10% last year."
Conn's said it is increasing is fiscal year earnings-per-share guidance to the $1.55 to $1.60 range, up from a previous forecast of $1.40 to $1.50.
Separately, the company announced a public offering of abut 3.6 million shares of common stock by certain shareholders and 1.4 million shares by the company, and has granted the underwriters a 30-day option to buy about 750,000 additional shares from the company to cover potential overallotments.
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