Home appliances and consumer electronics retailer Conn's, Inc. (CONN) Wednesday reported a wider loss for the third quarter, reflecting lower sales, higher litigation reserve as well as the impact of a goodwill impairment charge.
Quarterly net loss widened to $15.27 million or $0.68 per share from $7.74 million or $0.35 per share in the prior-year quarter. Latest quarter result included goodwill impairment charge of $9.62 million and non-cash fair value adjustment of $3.7 million.
Adjusted net loss, excluding one-off items, was $6.6 million or $0.29 per share, compared with a net income of $2.5 million or $0.11 per share in the year-ago quarter.
On an average, five analysts polled by Thomson Reuters expected the company to report a loss of $0.04 per share for the quarter. Analysts' estimates typically excluded special items.
Total revenues declined slightly to $182.84 million from $183.75 million in the comparable quarter. Total net sales declined 7.2% to $161.4 million from the prior year. Three analysts estimated revenues of $191.67 million for the quarter.
Conn's noted that revenue growth in furniture and mattresses was offset by declines in the consumer electronics, appliances and lawn and garden categories and repair service agreement commissions.
Same store sales dropped 9.3% from the prior fiscal year, due to increasingly challenging economic conditions experienced in the company's markets and the decline in average selling prices on flat-panel televisions.
The company said its litigation reserve was up $4.1 milllion to $4.9 million for the recent quarter to help settle outstanding litigation. Provision for bad debts increased to $3.50 million from $2.80 million a year earlier. Total cost and expenses were $202.30 million, up from $194.65 million in the same period previous year. Conn's previously withdrew its guidance as a result of the change in the economic conditions in its markets, though it still expects to be solidly profitable during the fourth quarter of fiscal 2010, excluding potential fair value adjustments.
For the nine-month period, net income was $1.20 million or $0.05 per share, much lower than $13.07 million or $0.58 per share in the previous year. Adjusted net income plunged to $8.9 million or $0.39 per share from $26 million or $1.15 per share in the previous year.
Year-to-date, total revenues increased to $634.37 million from $620.84 million last year.
CONN closed Tuesday's regular trading at $6.34 per share on the Nasdaq.
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