THE WOODLANDS, Texas – Conn’s said retail revenues for its second quarter ending July 31 dropped 8.6% to $279.9 million.
That decrease in retail revenue was primarily driven by a decrease in same store sales of 13.2%, partially offset by new store growth. The decrease in same store sales reflects proactive underwriting changes and industry wide supply chain disruptions, each of which was the result of the COVID-19 pandemic.
On a non-GAAP basis, adjusted retail segment operating income for the three months ended July 31 was $24.5 million after excluding professional fees associated with non-recurring expenses. On a non-GAAP basis, adjusted retail segment operating income for the three months ended July 31 was $36.1 million.
“Throughout the COVID-19 pandemic, we have focused on serving our customers by providing access to essential home-related products, while supporting our team members and communities,” said Norm Miller, Conn’s chairman and CEO. “Overall, our second quarter results were better than expected given the unprecedented disruption the COVID-19 crisis has caused.”
He added, “While the current environment remains uncertain, I am proud of our performance, which highlights the resiliency of our business model and the actions our team has taken to successfully navigate this unprecedented pandemic.”
Conn’s reported second quarter earnings of 70 cents per diluted share, a 13% increase from the prior fiscal year period, driven by positive credit segment operating results and cost saving initiatives.
The company said cash and third-party sales grew 51% compared with the prior fiscal year period, reflecting strong demand for home-related products.
Sales financed by Conn’s in-house credit declined by 36% from the prior fiscal year period as a result of tighter underwriting, despite a 5% year-over-year increase in applications.
E-commerce sales grew 72% from the prior fiscal year period.
The cash payment rate on outstanding loans increased to the highest second-quarter level in nine fiscal years. Operating cash flow increased 242% year-over-year, driven by growth of cash and third-party sales, strong payment rates on its customer receivables portfolio and a decline in Conn’s in-house credit originations.
The company opened two new Conn’s HomePlus showrooms during the second quarter of fiscal year 2021 and has opened two new Conn’s HomePlus showrooms during the third quarter of fiscal year 2021, bringing the total showroom count to 143 in 14 states. During fiscal year 2021, the company plans to open a total of seven to nine new showrooms in existing states to leverage its current infrastructure.