Conn’s Inc (NASDAQ:CONN) share price rose more than 20% after topping revenue and earnings estimates for the first quarter. Although the company’s revenue has plunged slightly since this time last year, overall, the significant growth in earnings has added to trader’s confidence.
The company’s smart business strategy of enhancing its highly profitable retail and consumer credit segment significantly contributed to its financial number for the first quarter.
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Retail and Credit Platform Expansion Strategies
Conn’s Inc has been working on initiatives to improve their credit platform over the last two years – which is also offering support to its retail business. The company believes it is on the path to achieving positive low single-digit same-store sales in the following quarters.
The company also expects same-store sales to increase around 3% in the second quarter while retail gross margin is likely to stand at about 40%, putting it one percent higher than the 39% achieved in the first quarter.
“With our credit platform on a clear path towards improved financial results, we continue to focus on driving sustainable growth in our highly profitable retail segment. Our first quarter results reflect accelerating momentum throughout our business, and we believe that the fiscal year 2019 will be a strong year for the Company,” stated Norm Miller, Conn’s Chairman, and Chief Executive Officer.
Financial Numbers are Showing Progress
Conn’s strategy of focusing on its retail and credit platform is turnings negative revenue growth into big profits. Its retail gross margin improved 120 basis points to a record level of 39.6% while its credit spread of 870 basis points reached the highest record level since 2014. The company’s consolidated operating margin was up 340 bps year-over-year to 9.1%.
Lower interest expense also aided the company in generating the highest first-quarter earnings in the last three years. Conn’s earnings per diluted share stood around $0.39 per share in the first quarter from a loss of $0.08 per share in the previous year period.
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