Conn's (CONN 44.39, +3.39) jumped 8.3% in pre-market,
looking to begin the session at a fresh four-year high after reporting better
than expected results for the second quarter.
The furniture and electronics retailer reported above-consensus second quarter earnings of $0.57 per share on a 4.9% year/year increase in revenue to $384.6 mln, which was also ahead of estimates.
Total same store sales increased 0.3% year/year, marking the first quarter of same store sales growth in three years. Retail gross margin improved to a record of 41.4%.
The company saw revenue growth across all major categories. Furniture and mattress sales grew 1.9% to $97.07 mln, though same store sales declined 2.3%. Furniture and mattress sales made up 32.8% of total sales, down from 33.3% one year ago. Furniture unit volume fell 4.3% while average selling prices increased 2.5%. Mattress unit volume fell 13.8% while average selling price grew 11.8%.
Home appliance sales increased 2.7% to $91.47 mln while same store sales grew 0.4%. Home appliance sales made up 30.9% of total sales, down from 31.1% one year ago. Unit volume fell 6.5% while average selling price increased 7.4%.
Consumer electronics sales grew 5.1% to $55.65 mln with same store sales growing 5.3%. Consumer electronics made up 18.8% of total sales, up from 18.5% of sales one year ago. Unit volume grew 2.2% while average selling price increased 3.0%.
Home office sales grew 8.0% to $19.29 mln with same store sales rising 8.5%. The segment made up 6.5% of total sales, up from 6.2% of sales one year ago. Unit volume grew 13.7% while average selling price declined 4.5%.
Repair service agreement commissions increased 9.1% year/year to $25.66 mln while same store sales declined 1.9%. Service revenue grew 5.2% to $3.47 mln.
Delinquency rate declined to 9.0% from 10.4% one year ago. The proportion of bad balances declined for the fourth consecutive quarter. Credit spread improved to 750 basis points, representing the best level in four years.
The company ended the quarter with 119 stores in operation after opening a location in Virginia in August. The company plans to open up to seven more stores before the end of the fiscal year.
Looking to the remainder of the fiscal year, the company expects that full-year same store sales will be between -5.0% and 0.0%. Markets not impacted by Hurricane Harvey are expected to generate same store sales between -2.0% and +2.0% while markets impacted by the Hurricane are expected to show same store sales decline between 5.0% and 12.0%. Retail gross margin is expected between 40.5% and 41.0%.
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