THE WOODLANDS - Conn's Inc. (NASDAQ: NASDAQ:CONN), a specialty retailer of home goods, reported a narrower adjusted net loss for the fourth quarter but missed revenue expectations.
The Texas-based company posted an adjusted net loss of $1.25 per share, which was $0.06 better than the analyst consensus of a $1.31 loss per share. However, quarterly revenue fell short of expectations, coming in at $366.1 million compared to the anticipated $405.4 million.
The company's total consolidated revenue for the quarter increased by 9.3% compared to the same period last year, primarily driven by an 8.6% increase in total net sales and a 10.7% increase in finance charges and other revenues.
The acquisition of W.S. Badcock, completed in December 2023, contributed $68.4 million to the total revenue. Despite the revenue growth, the company experienced a decline in same-store sales of 14.4%, attributed to lower discretionary spending for home-related products.
Conn's CEO Norm Miller highlighted the successful integration of Badcock and the significant cost synergies realized, amounting to approximately $50 million during the fourth quarter. He also mentioned over $50 million in additional cost synergies expected over the next 18 months and anticipated revenue synergies as Conn's transitions Badcock's credit program to its in-house loan product.
For the full fiscal year 2024, Conn's reported a total consolidated revenue decline of 7.8% to $1.2 billion, with a 9.1% decrease in total net sales and a 3.6% reduction in finance charges and other revenues. The adjusted net loss for the year was $6.22 per share.
Despite the challenging macro-environment, Miller expressed confidence in the company's position to emerge stronger and more resilient, expecting year-over-year improvements in retail sales and profitability throughout fiscal year 2025.
The company's retail segment saw an increase in revenue by 9.6% for the quarter, with Badcock contributing $60.3 million. However, the retail segment's operating loss widened to $38.1 million from $19.5 million in the same quarter last year. The adjusted retail segment operating loss was $21.8 million, excluding one-time transaction expenses.
The credit segment reported a 10.4% increase in revenue, benefiting from the inclusion of Badcock's financials. The credit segment's operating loss improved slightly to $12.8 million from an operating loss of $13.9 million in the prior year's quarter.
Conn's opened one new store in the fourth quarter, adding to the 376 stores acquired through the Badcock transaction, bringing the total store count to 553 across 15 states. The company also strengthened its balance sheet by completing a $252.6 million asset-backed securities transaction, with the Class A bond being 13 times oversubscribed.
As the company looks ahead, it remains focused on driving efficiencies, expanding its e-commerce capabilities, and leveraging its in-house credit program to better serve its core credit-constrained customers.
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