Conn's (CONN), a retailer of consumer durable goods, has announced a 7.89 percent decline in profit for the quarter ended Jul. 31, 2014. The company earned $17.65 million or $0.48 a share in the second-quarter compared with $19.16 million or $0.52 a share a year ago. Adjusted earnings per share came in at $0.50, when analysts expected $0.75.
Revenue during the second-quarter surged 30.39 percent to $352.96 million from $270.69 million in the last year period.
Total expenses as a percentage of revenues increased to 90.37 percent from 87.74 percent in the same period last year. That has resulted in contraction of 263 basis points in operating margins to 9.63 percent.
The company reported operating income of $34 million, compared with operating income of $33.19 million in the previous year period.
Theodore M Wright, Conn's chairman and chief executive officer said, 'The retail segment had another outstanding quarter with higher gross margins, expanded operating margins, and the 12th consecutive quarter of increasing same store sales. Strategies to grow sales of our most profitable product lines are proving enduringly successful. Over the last five months we have successfully opened an additional 14 stores, in 11 markets. We are reaching customers that were underserved before, giving low-income consumers the opportunity to purchase quality, durable, branded products for their homes at affordable monthly payments.'
The company expects earnings guidance to be in the range of $2.80 to $3.00 per diluted share on an adjusted basis for fiscal year 2015.
It also expects diluted earnings per share to be in the range of $2.75 to $2.95 for full year.
Cash Position
As on Jul. 31, 2014, the company's cash balance stood at $4.02 million, up 5.84 percent or $0.22 million from Jul. 31, 2013.
Working Capital
Conn's has witnessed an increase in the working capital over the last one year. The company's working capital stood at $658.37 million as at Jul. 31, 2014, up $200.77 million or 43.88 percent from $457.60 million on Jul. 31, 2013. It registered an increase in current ratio to 5.15 as at Jul. 31, 2014 from 4.43 on Jul. 31, 2013.
Debt Position
Conn's has witnessed an increase in the total debt over the last one year. As on Jul. 31, 2014, total debt stood at $607.38 million, up 81.48 percent or $272.70 million, from Jul. 31, 2013.
The company's total debt was 41.91 percent of total assets as on Jul. 31, 2014, compared with 32.70 percent on Jul. 31, 2013. It has witnessed an increase in debt to equity ratio to 0.95 on Jul. 31, 2014 compared with 0.63 on Jul. 31, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has declined to 5.44 from 10.59 in the same period last year.
Shares of the company went up by $0.10 or 0.22 percent to settle at $44.83 on Tuesday.
