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In an attempt to diversify I decided that I wanted to find a company that is in the retail sector. The first thing that I did before I began my search was to set a few things that I wanted in a company. I wanted a regional retailer which still presented the prospect of expansion. This eliminated companies that are already national chains because I want the opportunity of growing into new regions. The next thing that I wanted was a company that was already established in the market place and has stable financials. This part is very important because while I do want growth opportunity I also want a company that has a successful business model. After searching around the company that I found to fit the above two criteria is Conns Inc. Conns Inc. is a retailer that specializes in the sale of home appliances and consumer electronics in Texas and Louisiana. Conns currently operates 62 retail locations in Texas and Louisiana and plans to add 6 to 8 more stores over the 2008 fiscal year. According to COO William Nylin this will represent a increase of floor space by approximately 10-13%. It must also be noted that Conns is currently rearranging existing floor space in order to dedicate more space to the sale of furniture. The reasoning for this is because furniture has the highest margins of any of the products that Conns currently sells. The next area that I want to talk about with regard to Conns is the two portfolios that are being held as part of the credit company. This portion of Conns business represents an interesting area of the business. The first portion of this business that must be addressed is the affect that hurricanes Katrina and Rita caused a large amount of delinquencies in the past two years. This coupled with the support staff that Conns was employing was of relatively inexperienced members we can see that this area of the business has room to improve. Now as Conns moves forward the support staff is better experienced the portfolio is seeing delinquency levels that are right at historic levels. Overall I think that Conns represents an interesting company that has the ability to grow by opening new stores. I also want to make the point that Conns is a company that provides this character but also is healthy and making money with its current setup. Given managements plan to add 6-8 stores over the 2008 fiscal year I think we will see Conns financial statements continue to improve. |
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