Conn's, Inc. Reports Q2 Earnings
Sep 15, 2006
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Conn's, Inc., a specialty retailer of home appliances, consumer electronics, computers, and lawn and garden products, announced earnings results for the quarter and 6 months ended July 31, 2006 after restating its financial statements for fiscal years ending Jan. 31, 2006, 2005, and 2004 and the quarter ended April 30, 2006. The company said the restatement was necessary to correct for an error in recording securitization income and valuing its retained interest in its sold receivables portfolio which resulted in a cumulative understatement of U.S. $14.7 million of securitization income and interest in securitized assets since the inception of the company's securitization program. The error led management to conclude that its internal controls over financial reporting had a material weakness. Management further believes that the controls relating to the accounting for securitization have been enhanced to mitigate the risk of future misstatements. These new controls will be tested as part of the company's normal internal controls testing for year-end.

Net income for the second fiscal quarter decreased 10.9 percent to $8.5 million compared with $9.6 million for the restated second quarter of last year. Diluted earnings per share available for common stockholders were $0.35 compared with $0.40 for the second quarter of last year after the restatement and adoption of FAS123R. Total revenues for the quarter ended July 31, 2006 increased 10.7 percent to $182.2 million compared with $164.6 million for the quarter ended July 31, 2005. This increase in revenue included net sales increases of $19.8 million, or 13.8 percent, and decreases in "Finance charges and other" of $2.1 million, or 10.4 percent. Same store sales, revenues earned in stores operated for the entirety of both periods, increased 7.2 percent for the second quarter of fiscal 2007.

Net income for the 6 months ended July 31, 2006 increased 5.3 percent to $20.5 million compared with $19.5 million for the restated 6 months of the prior year. Diluted earnings per share available for common stockholders were $0.84 compared with $0.81 for the 6 months of last year after the restatement and adoption of FAS123R. Total revenues for the 6 months ended July 31, 2006 increased 16.1 percent to $374.4 million compared with $322.5 million for the 6 months ended July 31, 2005. This increase in revenue included net sales increases of $52.6 million, or 18.6 percent, and decreases in "Finance charges and other" of $0.7 million, or 1.6 percent. Same store sales, revenues earned in stores operated for the entirety of both periods, increased 11.7 percent for the first 6 months of fiscal 2007.

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