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Conn's, Inc. (CONN) announced its financial results on Thursday for the second quarter ended July 31, 2009.
Total revenues for the quarter ended July 31, 2009, increased 0.8% to $220.2 million, as compared to the same quarter in the prior fiscal year. Total net sales declined 0.2% to $190.3 million, as compared to the same quarter in the prior fiscal year. Revenue growth in furniture and mattresses and appliances was offset by declines in the consumer electronics and lawn and garden categories and service maintenance agreement commissions. same store sales decreased 5.2% during the second quarter of fiscal 2010.
The Company's profits fell on cost increases and customer delinquencies/charge-offs which continued to rise. Adjusted diluted earnings per share, excluding the non-cash fair value adjustments in both periods, was $0.22 for the second quarter of fiscal 2010, compared with $0.49 for the second quarter of the prior fiscal year. Net income for the quarter missed analysts' estimates of $0.30 per diluted share.
Timothy Frank, President and CEO of Conn's, commented in a conference call, "In the face of a challenging market in Q2, we gained market share, maintained control of the credit portfolio performance and continued to focus on removing costs from the business model. I am excited about our long term growth opportunities. We have a long track record of success through a variety of economic cycles and have delivered increasing sales and profitability since our founding. We believe that our unique value proposition and excellent customer service differentiates us from our competitors, and we expect to capture share in our markets."
He continued, "We increased market share in our key categories of electronics, aplliances, furniture and mattresses despite the challenging economy, as evidenced by our sales performance relative to published industry statistics. Revenues for consumer electronics and aplliance retailers for the three months ended July 31 were down 13.8%, while our revenues declined only 0.8% in those categories. Our furniture and mattress business has also continued to exceed industry performance."
Mr. Frank added, "We expect to continue to counter the national industry trends of lower sales through aggressive promotional activities."
He noted, "We are taking advantage of Circuit City's exit from the marketplace by taking market share through our existing store base and acquiring store locations in areas previously served by Circuit City."
Mr. Frank said, "We are committed to reducing our monthly expenses by $1 million, and we have identified many opportunities to remove costs from our business. We are in the process of implementing them and expect the initial cost savings to be in place by the end of Q3."
As a result of the challenging economic environment the Company faced during the second quarter and its outlook for the remainder of the fiscal year, it revised its guidance for fiscal year 2010 to earnings per diluted share, excluding fair value adjustments, of $1.40 to $1.60. The guidance includes an increased provision for bad debts, as compared to the prior year, due to the planned increase in the balance of customer receivables retained on the Company's balance sheet, to provide the required reserve for future estimated losses. The Company expects the actual credit portfolio performance to be consistent with its historical performance.
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