Conn’s Reports Improved Q4 Sales Despite CE Weakness
Conn’s reported stronger revenue and same-store sales for Q4 ended Jan. 31 despite a 10.5 percent decline in CE same-store sales and total CE sales shrinking 5.7 percent from Q4 the prior year. CE sales fell mainly on “reduced industry-wide demand,” it said Thursday.
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There were several pockets of CE strength despite the overall decline, Conn’s said. Sales of TVs with a screen size more than 60 inches jumped 39.5 percent to nearly 50 percent of Q4 TV revenue, it said. Tablet sales soared 139.3 percent, “partially offset by a reduction in computer unit volume and lower sales of accessory items,” it said. CE also “contributed more gross profit” than in the prior year’s Q4 as “increasing gross margin rates more than offset the decline in sales,” CEO Theodore Wright said in a news release (http://xrl.us/boffe6).
Total Q4 revenue grew 9.9 percent to $208.4 million, including product sales, repair service agreement commissions and service revenue, Conn’s said. Total same-store sales rose 7 percent after growing 12.1 percent in Q4 the prior year, it said. January total same-store sales increased 10 percent despite CE same-store sales slipping 4.8 percent for the month, it said. Total Q4 CE revenue fell to $72.4 million from $78.1 million.
The company was “pleased to report” its sixth straight quarterly increase in same-store sales, said Wright. Home appliances “performed well” in Q4, with same-store sales up 12 percent, he said. Home appliance sales grew to $50.4 million from $44.9 million. Home office revenue inched up to $22.6 million from $19.5 million, with same-store sales up 12.6 percent. The average selling price of home appliances grew 21.5 percent, “partially offset” by a 7.3 percent decline in unit volume, it said. Retail gross margin was about 36.5 percent in Q4, up about 700 basis points from Q4 the prior year, Conn’s said, due mainly to a 54.1 percent increase in higher-margin furniture and mattress sales, and a “favorable shift” in product “mix to higher-margin offerings within each of the product categories."
The chain’s “execution” of new store openings also “improved,” said Wright. Three of the four stores that it opened in Q4 were among its top five stores in January, he said. Conn’s ended Q4 with 68 stores after opening four and closing one. It had 65 stores at the end of the prior year’s Q4. All the sales data were “preliminary” and “subject to change upon completion” of the company’s annual financial statement closing process, Conn’s said. It didn’t report Q4 earnings details and said it will post full Q4 results April 3. Conn’s shares closed 1.6 percent higher Thursday at $30.47.