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Conn's widens Q3 loss, trims full year guidance

Last updated: 16:08 08 Dec 2011 GMT, First published: 17:08 08 Dec 2011 GMT

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Specialty retailer, Conn's (NASDAQ:CONN) said Thursday it widened its third quarter loss and trimmed its full-year guidance.

For fiscal year 2012, the company said it now expects earnings to be between $0.55 and $0.65 per share, excluding charges related to future store closings and other one-time items.

It had previously expected between $0.65 and $0.75 per share in earnings.

Analysts polled by Bloomberg are anticipating $0.73 per share in full-year 2012 profits.

For the three months ended October 31, Conn's posted net loss of $12.72 million, or $0.40 loss per share, compared to a loss of $4.78 million, or $0.19 loss per share, a year ago.

Adjusted for certain one-time items, like store closing costs, and inventory reserve adjustments, earnings were $497,000, or $0.02 per share, up from an adjusted loss of $2.90 million, or $0.12 loss per share, a year ago.

Analysts had expected a 16-cent per share gain.

Total revenues rose five percent to $179.55 million, from $170.56 million in the same period last year, beating analysts' $161 million outlook.

Conn's CEO Theodore Wright said: "I am encouraged by our sales performance, as we returned to positive same store sales during the quarter.

"The improvements in our retail operating performance carried over into the month of November, when we experienced a same store sales increase of 10.5%."

Sales under the company's retail segment hiked 12 percent to $155.02 million, as product sales increased 12 percent, repair service commissions increased 28 percent, and service revenues rose five percent, to $140.4 million, to $10.6 million, and to $3.95 million, respectively.

Conn's said its increase in retail sales was driven by higher average selling prices in all major categories, and increased unit sales in furniture and mattresses, home appliances, and consumer electronics.

The Beaumont, Texas-based company said its credit segment posted $24.53 million in revenues, down over 24 percent. Conn's said the decline is a result of reduced total portfolio balances and delinquency levels, which resulted in lower interest earnings and servicing costs.

Changes to the company's charge-off policy in July 2011 resulted in lower net charge-offs during the quarter, falling 98 percent to $5.4 million.

Conn's provisions for bad debt, or the money it sets aside to cover bad loans, increased to $19.3 million, up 79 percent, while its gross margins for the quarter shed 60 basis points, to 25.2 percent.

In other news, the company also released its initial earnings guidance for the 2013 fiscal year. Conn's expects per-share profits in the range of $1.05 to $1.15. Analysts expect 87-cents per share.

On the Nasdaq, Conn's shares rose 1.47 percent to $12.40, as of 11:58 am EDT. The company's stock has more than doubled to far this year.

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