In the fourth quarter, ended January 31, when it emphasized margin over sales growth, Conn’s recorded a net loss of $74,000, or $0 per diluted share, versus net income of $1.1 million, or three cents per diluted share, in the year-previous period.
Adjusted net income came in at $1.5 million, or five cents per share, versus adjusted net income of $3.5 million, or 11 cents per share, in the fiscal 2015 quarter. Conn’s exceeded an analyst average estimate published by MarketBeat, which called for a loss of nine cents per adjusted share.
Total retail segment revenues were $356.2 million for the fourth quarter, a decrease of 5.5% from the year-earlier period, primarily resulting from a 9.3% decline in product-related comparable store sales partially offset by new store openings. Overall, company comparable sales, including repair service agreement commissions and service revenues, slipped 8.9%.
Underwriting changes made in the fourth quarter of fiscal year 2016 and during fiscal year 2017 had a negative impact on sales results, the company added. Retail segment operating income was $56.1 million versus $44.9 million in the fiscal year earlier. Adjusted retail segment operating income was $57.2 million without a net charge of $1.1 million primarily associated with an amendment of sales tax reserves.
Total revenues, including finance charges, were $432.8 million versus $456.8 million in the quarter a fiscal year prior. By segment, comparable stores sales for furniture and mattress was down 9.2%, home appliances was down 9.7%, consumer electronics was down 6.4%, home office was down 18.4% and for other products was down 8.5%.
For the full fiscal year, Conn’s posted a net loss of $25.6 million, or 83 cents per diluted share, versus net income of $30.9 million, or 87 cents per diluted share, in the year previous. Adjusted net loss came in at $6.7 million, or 22 cents per share, versus net income of $36.8 million, or $1.03 per share, in fiscal 2015. Retail segment revenues were $1.19 billion versus $1.2 billion and total revenues were $1.6 billion versus $1.61 billion in the fiscal year prior.
“Fiscal 2017 was a transitional year, focused on creating a strong credit platform to improve Conn’s near-term results and support the pursuit of the company’s long-term growth strategy. While much of our focus during fiscal 2017 was on turning around the credit operation, Conn’s retail business performed well. The company has created a differentiated and valuable retail experience by offering customers a large selection of brand name, top-of-the-line products, leading customer service and affordable credit programs,” said Norm Miller, Conn’s chairman, president and CEO.
He added, “Conn’s retail business had a strong fourth quarter, despite the approximately 1,000 basis points impact underwriting refinements made earlier this fiscal year had on same store sales. We do not believe there was any material negative impact on retail or credit trends in the fourth quarter as a result of October’s implementation of the direct loan program in Texas. Favorable mix within product categories and lower warehouse, delivery, and transportation costs improved retail gross margin 280 basis points compared to the fiscal 2016 fourth quarter, and 140 basis points from the fiscal 2017 third quarter. Retail operating margins in the 2017 fourth quarter were 15.7%, compared to 11.9% for the same period last fiscal year as a result of record quarterly gross margins and a 6.7% decline in SG&A expenses. Conn’s fourth quarter retail results demonstrate the resiliency of our unique operating model to recent challenges many retailers are experiencing. We are excited about our recently announced partnership with Progressive Leasing and the opportunity to significantly expand Conn’s lease-to-own sales.”
