Retailer Conn's, Inc. Reports Net Sales Increase Of 8%

Furniture World Magazine

Conn’s, Inc., a specialty retailer of home appliances, consumer electronics, computers, lawn and garden products, furniture and mattresses, announced its net sales results for the quarter ended January 31, 2008. Net sales for the quarter ended January 31, 2008, of $200.6 million, increased $11.4 million, or 6.0%, as compared with the quarter ended January 31, 2007. Net sales represent total product sales (see table below), service revenues and commissions from service maintenance agreement sales. Same store sales (sales recorded in stores operated for the entirety of both periods) increased 1.9% for the quarter ended January 31, 2008. Revenues from finance charges and other for the quarter will be reported in the Company's earnings release and conference call scheduled for March 27, 2008. During the quarter ended January 31, 2008, the Company opened three new stores in the Dallas/Fort Worth Metroplex, one new store in Houston, Texas, and its first store in Oklahoma City, Oklahoma, giving it a total of 69 stores as of the end of the quarter. “Consumer electronics drove our sales growth again this quarter,” said the Company’s Chairman and CEO, Thomas J. Frank, Sr. “After our record Thanksgiving weekend, though the pace of sales slowed as we encountered a difficult retail environment during the quarter, we achieved same store sales growth at the lower end of our expectations.” The following is a summary of the key items impacting net sales during the quarter: - The electronics category showed solid growth driven by continued consumer interest in flat-panel televisions, especially LCD televisions. - The appliance category declined on lower laundry and refrigeration sales. - Strong track sales increases were largely due to higher video game equipment and laptop computer sales, and the addition of GPS devices. - Furniture sales growth was impacted by new store additions. - Service maintenance agreement commissions increased on higher sales penetrations, especially in the electronics category. Net sales for the year ended January 31, 2008, increased $54.1 million, or 8.0%, from $676.9 million for the year ended January 31, 2007, to $731.0 million for the year ended January 31, 2008. Same store sales for the year ended January 31, 2008, increased 3.2%. About Conn’s, Inc.: The Company is a specialty retailer currently operating 69 retail locations in Texas, Louisiana and Oklahoma: 22 stores in the Houston area, 17 in the Dallas/Fort Worth Metroplex, 10 in San Antonio, five in Austin, four in Southeast Texas, one in Corpus Christi, three in South Texas, six in Louisiana and one in Oklahoma City. It sells home appliances, including refrigerators, freezers, washers, dryers, dishwashers and ranges, and a variety of consumer electronics, including micro-display projection, plasma and LCD flat-panel televisions, camcorders, digital cameras, computers and computer accessories, DVD players (both standard and high definition), video game equipment, portable audio and home theater products. The Company also sells lawn and garden products, furniture and mattresses, and continues to introduce additional product categories for the home to help respond to its customers' product needs and to increase same store sales. Unlike many of its competitors, the Company provides flexible in-house credit options for its customers. In the last three years, the Company has financed, on average, approximately 58% of retail sales. Customer receivables are financed substantially through an asset-backed securitization facility, from which the Company derives servicing fee income and interest income. The Company transfers receivables, consisting of retail installment contracts and revolving accounts extended to its customers, to a qualifying special purpose entity (QSPE) in exchange for cash and subordinated securities. The QSPE funds its purchases of the receivables through the issuance of medium-term and variable funding notes issued to third parties and secured by the receivables, and subordinated securities issued to the Company.