Conn's Q3 Loss Narrows - Quick Facts

(RTTNews) - Conn's Inc. (CONN) reported that its net loss for the third-quarter ended October 31, 2015 narrowed to $2.4 million, or $0.07 loss per share, from $3.1 million, or $0.08 loss per share in the prior year.

The latest-quarter results included net charges of $2.5 million, or $0.06 per share on an after-tax basis, primarily from legal and professional fees related to the exploration of strategic alternatives and securities-related litigation and executive management transition costs, and loss on extinguishment of debt of $1.4 million, or $0.03 per diluted share on an after-tax basis.

The prior year result included net charges of $0.4 million, or $0.01 per diluted share on an after-tax basis, primarily related to legal and professional fees related to the exploration of strategic alternatives and securities-related litigation.

Norm Miller, Conn's Chief Executive Officer and President, said "…….While same store sales were flat for the quarter, excluding the impact of our strategic decision to exit video game products, digital cameras, and certain tablets, same store sales were up 3.8%. We expect this decision to affect same store sales by approximately 6% during the fourth quarter of fiscal 2016, with the impact declining as we head into next year and anniversary the change."

Adjusted earnings for the quarter, which excluded charges and credits and loss on extinguishment of debt, was $0.02 per share compared to adjusted loss for the three months ended October 31, 2014, which excludes charges and credits, of $0.07 per share.

Consolidated revenues increased 6.8% to $395.2 million due to an increase in retail revenue from new store openings, 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 110 basis point decrease in portfolio yield. Same store sales for the quarter increased 3.8%, excluding the impact of the Company's strategic decision to exit video game products, digital cameras, and certain tablets.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.24 per share and revenues of $401.70 million for the third-quarter. Analysts' estimates typically exclude special items.

During fiscal 2016, the Company discontinued offering video game products, digital cameras and certain tablets. During fiscal 2015, net sales and product margin from the sale of these products were approximately $50.0 million and $5.0 million, respectively. The Company also experienced significantly higher charge-off rates and lower product margins associated with purchases of these products by its customers.

For fiscal year 2016, the Company reaffirmed its expectations for Change in same stores sales to range from flat to up low single digits; and Retail gross margin between 40.5% and 41.5%.