UPDATE 2-Conn's Q4 profit beats Wall Street; outlook bright
(Recasts throughout; adds conference-call comments, analyst's comments, background, dateline; updates share movement)
By Dhanya Skariachan
BANGALORE, March 27 (Reuters) - Retailer Conn's Inc (CONN.O: Cotización) reported a fourth-quarter profit that beat market estimates as it reaped benefits from giving customers flexible options to buy products on credit and operating stores in areas not hit hard by the U.S. economic slump, boosting its shares as much as 14 percent.
The company, which sells home appliances and consumer electronics through nearly 70 stores in Texas, Louisiana and Oklahoma, also forecast strong earnings for the year ending January 31, 2009.
Conn's, which increased its revolving bank facility to $100 million from $50 million, was helped by a 5 percent rise in product sales and a fall in loan delinquencies during the fourth quarter.
The company, which competes with home goods retailers such as Williams-Sonoma Inc (WSM.N: Cotización) and Tuesday Morning Corp (TUES.O: Cotización), and consumer electronics retailers such as Best Buy Co (BBY.N: Cotización), said it has performed well during economic downturns historically due to its flexible credit programs and customer loyalty.
"The fact that they will provide financing to a customer who has trouble getting finance in other ways is what keeps them going," Morgan Keegan analyst Laura Champine said from New York.
Conn's posted a net profit of $13.1 million, or 57 cents a share, including a charge of 1 cent a share, for the fourth quarter. It earned $12.7 million, or 52 cents a share, a year earlier. Revenue rose 6 percent to $225.9 million.
Analysts on average expected earnings of 50 cents a share, before special items, on revenue of $232.6 million, according to Reuters Estimates. Continuación...