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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
August 7, 2006
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CONN'S, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other Jurisdiction of Incorporation or Organization)
000-50421 06-1672840
(Commission File Number) (IRS Employer Identification No.)
3295 College Street
Beaumont, Texas 77701
(Address of Principal Executive Offices and zip code)
(409) 832-1696
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Securities Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) 12 under the
Securities Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) 12 under the
Securities Act (17 CFR 240.13e-2(c))
Item 2.02 Results of Operations and Financial Condition.
On August 7, 2006, the Company issued a press release announcing its
net sales for the quarter and the six months ended July 31, 2006. The press
release further announced a reduction in the Company's earnings guidance for its
fiscal year ending January 31, 2007.
The press release also contains the announcement of a Company's webcast
to be broadcast on August 8, 2006, 10:00 A. M. Central Time from the Company's
corporate headquarters.
A copy of the press release is furnished herewith as Exhibit 99.1 and
is incorporated herein by reference.
Item 9.01(c) Exhibits.
Exhibit 99.1 Press Release, dated August 7, 2006
All of the information contained in Item 2.02 and Item 9.01(c) in this
Form 8-K and the accompanying exhibit shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and
shall not be incorporated by reference in any filing under the Securities Act of
1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONN'S, INC.
Date: August 7, 2006 By: /s/ David L. Rogers
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David L. Rogers
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
- ------------ ------------
99.1 Press Release, August 7, 2006
Exhibit 99.1
Conn's, Inc. Reports Sales Results for the
Quarter and Six Months Ended July 31, 2006 and Updates Annual Guidance
BEAUMONT, Texas--(BUSINESS WIRE)--Aug. 7, 2006--Conn's, Inc.
(NASDAQ/NM:CONN), a specialty retailer of home appliances, consumer
electronics, computers, lawn and garden products, furniture and
mattresses, today announced its net sales results for the quarter and
six months ended July 31, 2006.
Net sales for the quarter ended July 31, 2006 increased $19.9
million, or 13.8%, from $143.8 million for the quarter ended July 31,
2005 to $163.7 million. Net sales for the six months ended July 31,
2006 increased $52.6 million, or 18.6%, from $282.8 million for the
six months ended July 31, 2005 to $335.4 million for the six months
ended July 31, 2006.
Net sales represent net product sales, delivery charges, service
revenues and commissions from service maintenance agreement sales.
Revenues from finance charges and other for the quarter will be
reported in the Company's press release and conference call scheduled
for August 25, 2006.
Same store sales (sales recorded in stores operated for the
entirety of both periods) increased 7.2% for the quarter ended July
31, 2006 and were up 11.7% for the six month period. In addition to
same store sales, the Company benefited from the four stores added
since the first two quarters of last year. The Company experienced
approximately 20% increases in its core categories of major appliances
and electronics and also saw strong percentage increases in the
mattresses and furniture categories this six months. As a percentage
of total net sales, appliances and electronics represent approximately
36% and 32%, respectively.
During the quarter, the Company opened its 58th store; the new
25,500 square-foot store is located in west Houston. The Company
expects to open five to six new stores during the fiscal year ending
January 31, 2007, including the two stores already opened so far this
year.
"While sales growth slowed slightly from the first quarter, we are
pleased with our sales relative to last year's strong sales
performance and remain confident that same store sales for the year
will fall within our guidance of mid to high single digits," said
Thomas J. Frank, Chairman and Chief Executive Officer.
Revised annual guidance
The Company today lowered its annual guidance for earnings per
diluted share to a range of $1.60 - $1.75 from a range of $1.85 -
$1.90 citing changes in its operating environment since its earlier
estimate. Specifically, the Company noted the following contributing
factors:
-- that second quarter sales had not kept pace with the first
quarter sales performance with much tougher comps in the
second half of the year still to come;
-- that loan losses have been higher than originally anticipated
due to the impact of Hurricane Rita;
-- that the credit portfolio balance has not grown to the level
expected and therefore interest income in the second half will
be lower than originally estimated;
-- that interest rates are expected to be higher for the year
than originally anticipated which will shrink the spread of
net interest earned by the Company's wholly-owned credit
subsidiary;
-- that a considerable infrastructure investment was made in
replicating corporate facilities, including credit
collections, in Dallas and Houston to mitigate future
disruption due to environmental or other disasters similar to
those suffered last year; and,
-- that the Dallas distribution network was further developed
including the full deployment of the 150,000 square foot
Dallas distribution center.
The Company has undertaken several initiatives to improve
operating results:
-- the Company has made modifications in management in its retail
and credit divisions to bring about performance improvements;
-- the Company is in the process of reallocating resources and
restructuring collection efforts to minimize the effects of
the hurricane losses to achieve a loss rate that is more
consistent with historical loss rates;
-- the Company is revising its credit promotion strategies for
the rest of the year which should result in credit portfolio
balance growth;
-- stringent cost control measures are being implemented in all
areas of the Company; and,
-- the anticipated issuance of another series of medium-term,
fixed-rate bonds early in the third quarter by the Company's
credit subsidiary will moderate the volatility in interest
rates.
"At this point last year, we were enjoying the benefit of very
positive 'tail winds' including robust sales increases and the best
credit-loss performance in a decade," remarked Mr. Frank. "This year
we are facing considerable 'head winds' as the Company faces tough
comps from last year, higher interest rates and the effects of last
year's hurricanes. In discussing the previous year, I have often
characterized its phenomenal performance as 'a year and a half in one
year.' That's the kind of year we are up against. For all the factors
mentioned we find it necessary to fine-tune our earnings estimate."
The Company will host a conference call and audio webcast on
Tuesday, August 8, 2006 at 10:00AM, CDT, to further explain this
change in its guidance and to answer any questions related to such
change. The webcast will be available live at www.conns.com and will
be archived for one year. Participants can join the call by dialing
(800) 665-0430 or (913) 312-1300.
About Conn's, Inc.
The Company is a specialty retailer currently operating 58 retail
locations in Texas and Louisiana. It sells major home appliances,
including refrigerators, freezers, washers, dryers and ranges, and a
variety of consumer electronics, including projection, plasma, LCD and
DLP televisions, camcorders, DVD players and home theater products.
The Company also sells computers, lawn and garden products, mattresses
and furniture, and continues to introduce additional product
categories for the home to help increase same store sales and to
respond to our customers' product needs.
Unlike many of its competitors, the Company provides in-house
credit options for its customers. Historically, it has financed over
57% of retail sales. Customer receivables are financed substantially
through an asset-backed securitization facility, from which the
Company derives servicing fee income and interest income from these
assets. The Company transfers receivables, consisting of retail
installment contracts and revolving accounts extended to its
customers, to a qualifying special purpose entity in exchange for cash
and subordinated securities represented by asset-backed and variable
funding notes issued to third parties.
This press release contains forward-looking statements that
involve risks and uncertainties. Such forward-looking statements
generally can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "intend," "could," "estimate,"
"should," "anticipate," or "believe," or the negative thereof or
variations thereon or similar terminology. Although the Company
believes that the expectations reflected in such forward-looking
statements will prove to be correct, the Company can give no assurance
that such expectations will prove to have been correct. The actual
future performance of the Company could differ materially from such
statements. Factors that could cause or contribute to such differences
include, but are not limited to: the Company's growth strategy and
plans regarding opening new stores and entering new markets; the
Company's intention to update or expand existing stores; the Company's
estimated capital expenditures and costs related to the opening of new
stores or the update or expansion of existing stores; the Company's
ability to introduce additional product categories; the Company's cash
flow from operations, growth trends and projected sales in the home
appliance and consumer electronics industry and the Company's ability
to capitalize on such growth; relationships with the Company's key
suppliers; the results of the Company's litigation; weather conditions
in the Company's markets; changes in the Company's stock price; and
the actual number of shares of common stock outstanding. Further
information on these risk factors is included in the Company's filings
with the Securities and Exchange Commission, including the Company's
Form 10-K filed on March 31, 2006. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date of this press release. Except as required by law, the
Company is not obligated to publicly release any revisions to these
forward-looking statements to reflect the events or circumstances
after the date of this press release or to reflect the occurrence of
unanticipated events.
CONTACT: Conn's, Inc.
Thomas J. Frank, 409-832-1696 ext. 3218
(Chairman and CEO)