Conns Inc. (NASDAQ: CONN) reported its fiscal third-quarter financial results before the markets opened on Tuesday. The company had $0.02 in earnings per share (EPS) on $395.2 million in revenue, compared to Thomson Reuters consensus estimates that called for $0.24 in EPS on revenue of $401.70 million. In the same period of the previous year, the retailer posted a net loss of $0.08 per share on $370.06 million in revenue.
Same-store sales for the quarter increased by 3.8%, excluding the impact of Conn’s strategic decision to exit video game products, digital cameras and certain tablets.
The board of directors authorized the repurchase of up to a total of $75.0 million of outstanding shares of its common stock and its senior notes. However during this quarter, the company repurchased 1.9 million shares for $51.6 million and $22.9 million in senior notes.
In terms of guidance, the company expects same-store sales to remain flat and for retail gross margin to be in the range of 40.5% to 41.5% for the fiscal full year. The consensus estimates call for $1.62 in EPS on $1.63 billion in revenue for the fiscal year.
Norm Miller, president and CEO of Conn’s, commented on earnings:
While not happy with the results this quarter, I am pleased with the progress we are making to improve retail and credit trends. We drove retail gross margin expansion through an increase in the furniture and mattress sales mix. Additionally, enhancements to our marketing strategy during November are driving strong credit application growth, helping us achieve a high-teens percent increase in written sales over the Thanksgiving holiday, and same store sales growth in November of 8.0%, excluding exited categories.
He added:
Retail gross margin improved 90 basis points year-over-year to 41.5% compared to our long term goal of 42%. 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.
On the books, cash and cash equivalents totaled $109.1 million to end the quarter, compared to $12.22 million at the end of the previous fiscal year.
Shares of Conns traded down 2.6% at $24.00 Tuesday morning, with a consensus analyst price target of $38.25 and a 52-week trading range of $14.02 to $43.95.
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