Conn's Q2 Net Income Decreases; Announces Planned Leadership Succession

(RTTNews) - Conn's, Inc. (CONN) reported second-quarter net income of $16.5 million or $0.45 per share, compared to $17.7 million or $0.48 per share, prior year. The company noted that its net income for the three months ended July 31, 2015 included net charges of $1.0 million, or $0.02 per share on an after-tax basis, from legal and professional fees related to the exploration of strategic alternatives and securities-related litigation.

On average, seven analysts polled by Thomson Reuters expected the company to report profit per share of $0.47 for the quarter. Analysts' estimates typically exclude special items. Revenue increased to $396.05 million from $352.96 million last year. Analysts expected revenue of $396.38 million for the quarter. Consolidated revenues increased 12.2% due to: an increase in retail revenue from new store openings and an increase in same store sales of 3.1%, partially offset by store closures; as well as an increase in credit revenue from growth in the average balance of the customer receivable portfolio, partially offset by a 210 basis point decrease in portfolio yield. Same store sales for the quarter increased 6.7%, excluding the impact of the company's decision to exit video game products, digital cameras, and certain tablets.

Conn's reported $112.7 million in total retail net sales for the month ended August 31, 2015, a 5.3% increase compared to the same prior year period. Same store sales decreased 0.2%.

For fiscal 2016, the company reaffirmed its expectations for change in same stores sales to range from flat to up low single digits. The company updated guidance for retail gross margin between 40.5% and 41.5%.

Separately, Conn's also announced a number of strategic initiatives, which represent the completion of a carefully considered strategic plan, developed under the leadership of Conn's Board, to position the company for enhanced long-term shareholder value.

The Board, implementing a long-planned leadership succession, has appointed Norman Miller to serve as Chief Executive Officer and President. Miller is a seasoned executive with considerable experience in retail and consumer finance, having previously served as President of both Sears Automotive and DFC Global. He succeeds Theodore Wright, who will remain on the Conn's Board as Executive Chairman, transitioning to Non-Executive Chairman at the end of the fiscal year.

The company entered into an agreement to securitize $1.4 billion of retail installment contract receivables. The Board approved the termination of the company's stockholders' rights plan, effective at the close of the securitization transaction, currently anticipated to be on or about September 10, 2015. The Board has authorized the repurchase of up to $75.0 million of its outstanding common stock or senior notes.