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Conn's Inc
NASDAQ:CONN

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Conn's Inc
NASDAQ:CONN
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Price: 3.42 USD 5.88%
Updated: Mar 28, 2024

Earnings Call Analysis

Q3-2024 Analysis
Conn's Inc

Conn's Q3 Update and Badcock Acquisition Strategy

In the third quarter, Conn's faced a 12.8% revenue decline year-over-year, reporting total revenues of $280.1 million with a GAAP net loss of $2.11 per diluted share. Nevertheless, the company's strategy involves leveraging its credit expertise and scaling operations through its acquisition of Badcock, expecting to enhance lease-to-own sales and e-commerce, propelled by operational synergies. This acquisition is creating a larger footprint with over 550 stores and $1.85 billion in revenue, driving expectations for significant cost savings. Looking ahead, Conn's forecasts a bright future with an anticipated annual adjusted EBITDA of $180 to $220 million and total annual sales between $2 billion to $2.2 billion by fiscal 2026.

Conn's Joins Forces with Badcock Home Furniture in a Transformative Union

In a bold move, Conn's, a retailer with a rich history of over 120 years, has announced a significant transaction with Badcock Home Furniture, creating a retailer powerhouse with over 550 outlets across 15 states in the Southern U.S. This acquisition notably boosts annual revenue to approximately $1.85 billion. Both companies boast similar histories, product categories, customer profiles, and payment solutions, suggesting a seamless integration that holds promise for enhancing gross margins and driving substantial cost savings. With a robust independent dealer network and a shared commitment to providing flexible financing solutions, this union is set to provide growth opportunities for the company and value creation for customers and shareholders alike.

Strategic Rationale: Capitalizing on Complementary Strengths

The key strategic rationale behind the partnership is the accelerated growth driven by complementary product categories and customer bases. Conn's has a strong footing in furniture and mattress sales, anticipating these categories to constitute approximately 47% of annual revenue post-merger. This pairing presents opportunities to cross-sell and enhance product assortments both in-store and online, tapping into private label brands like Dreamspot and Villa Hill to further drive revenue and margin growth.

E-Commerce and Credit Infrastructure: Pathways to Growth

Conn's has experienced a significant increase in e-commerce sales, ballooning from $12.6 million to more than $100 million in trailing 12-month sales. Badcock trails behind with $24 million in e-commerce sales, but Conn's plans to leverage its digital platform and logistics network to expand this rapidly. There's also a clear opportunity to enhance Badcock's credit yield and incremental sales by transitioning to Conn's in-house term loan product and utilizing its digital application process. Not to mention the 26% increase in application volume for Conn's that Badcock stands to gain from.

Addressing the Challenges: A Tough Quarter with a Silver Lining

Conn's faced headwinds in the third quarter of fiscal 2024 with a 12.8% year-over-year revenue decline, attributed to the pull-forward demand during the pandemic. The retail segment reported an increased operating loss of $24.8 million compared to $17.7 million in the previous fiscal year, and the company incurred a credit segment loss before taxes of $36 million, up from $11.8 million. Despite these challenges, the combined entity anticipates leveraging scale and platform to create purchasing and logistics synergies aimed at improving gross margin going forward.

Looking Ahead: Financial Expectations and Growth Strategies

With approximately seven weeks of Badcock's financial results contributing to the fourth quarter, Conn's anticipates some softness in total sales trends but expects consolidated revenue to benefit from new segments. Looking forward, the company aims to enhance its growth strategies centered on product diversity, dealer network expansion, e-commerce development, and credit facilitation. Conn's sets ambitious revenue targets between $2 billion and $2.2 billion with adjusted EBITDA reaching $180 million to $220 million by fiscal year 2026.

Earnings Call Transcript

Earnings Call Transcript
2024-Q3

from 0
Operator

Good morning, and thank you for holding. Welcome to Conn's, Inc. conference call to discuss earnings for the fiscal quarter ended October 31, 2023. The transaction with Badcock Home Furniture and more. My name is Sherry, and I will be your operator today. [Operator Instructions] As a reminder, this conference call is being recorded. The company's earnings release dated December 18, 2023, was distributed yesterday evening as well as a press release on the transaction with Badcock Home Furniture and more. Both releases can be accessed via a company's Investor Relations website at ir.conns.com. During today's call, management will discuss, among other financial performance measures, adjusted retail segment operating loss. Please refer to the company's earnings release that was issued today for a reconciliation of these non-GAAP measures to their most comparable GAAP measures. I must remind you that some of the statements made in this call are forward-looking statements within the meaning of federal securities laws. These forward-looking statements represent the company's present expectations or beliefs concerning future events. The company cautions that such statements are necessarily based on certain assumptions, which are subject to risks and uncertainties, which could cause actual results to differ materially from those indicated today. Your speakers today are Norm Miller, the company's CEO; and Tim Santo, the company's interim CFO.

I would now like to turn the call over to Mr. Miller. Please go ahead.

N
Norman Miller
executive

Good morning, and thank you for joining today's call to review Conn's transaction with Badcock Home Furniture and more and our third quarter fiscal year 2024 financial results. I am thrilled to speak with everyone today regarding Conn's transformative transaction with Badcock. By uniting 2 companies each with over 120 years of serving customers, we have created a leading home goods retailer with more than 550 retail locations across 15 states in the Southern United States and generating approximately $1.85 billion in annual revenue.

The transaction is a transformative opportunity for Conn's as we believe it will accelerate our growth by combining 2 complementary businesses with similar product categories, payment solutions and customer profiles while driving material cost savings, enhancing gross margins and improving operating leverage across the combined business. As a result, we believe we can create significant value for our customers, team members, communities and shareholders. For those of you not familiar with Badcock, the company was founded in 1904 and currently operates nearly 380 Badcock Home Furniture and more stores across 8 Southeastern states. Like Conn's, many of Badcock's customers are multigenerational and rely on Badcock's payment solutions to help turn their house into a home.

For the past 2 years, Mitchell Stiles has helped lead Badcock's approximately 1,000 associates as the company's President and Chief Operating Officer. Mitchell has held a variety of positions of increased responsibility over his 20-year tenure with the company and I look forward to working with him as a member of the Conn's leadership team.

Throughout its history, Badcock has been known as a strong regional furniture and mattress retailer with approximately 70% of Badcock's annual sales coming from these categories. The remaining 30% of Badcock sales are primarily appliances, electronics and home office equipment. A critical part of Badcock's customer value proposition is the flexible financing solutions the company has provided throughout its history. Approximately 60% of Badcock's retail sales are supported by an in-house payment program called Badcock Easy purchase. In addition, 10% of retail sales are supported by third-party financing and lease-to-own solutions, while the remaining 30% of retail sales are cash purchases.

Over 75% of Badcock's stores are individually owned through an independent dealer network business model, enabling entry into attractive locations with minimal capital investments. This unique model supports multiple opportunities for Badcock's 120-plus independent dealers to thrive in their local communities. We are excited to partner with these important stakeholders and help provide additional growth opportunities for Badcock's dealer network. Conn's and Badcock share complementary businesses with similar histories product categories, customer profiles and payment solutions. Combined, we believe we can leverage the core capabilities of both Conn's and Badcock to accelerate growth expand profitability and provide our customers and team members with greater opportunities as part of a larger and more dynamic company.

So with this background, I want to review the 4 strategic rationales of the Badcock announcement, starting with how this combination is expected to accelerate sales growth. The transaction provides a number of compelling revenue synergies that we believe will drive a multiyear growth strategy.

First, we believe we can capitalize on what has made each company successful over the past 120-plus years. Badcock was founded as a furniture and mattress retailer expanding its product categories over the years to include appliances, consumer electronics and home office with furniture and mattress sales representing 70% of Badcock's annual sales prior to the transaction.

Conversely, Conn's was founded as an appliance retailer, expanding our product categories over the years to include consumer electronics, furniture, mattress and home office. In fact, it was a little over 10-years ago when we started to strategically increase the size of our stores to add a more complete line of furniture and mattress products. In fiscal 2012, furniture and mattress sales accounted for 14.9% of total product sales compared to 33.8% in fiscal 2023. Going forward, we expect the furniture and mattress categories to represent approximately 47% of our combined annual revenue, and we believe the transaction with Badcock will drive further growth of these high-margin categories. As a result, we believe this complementary sales mix creates opportunities to drive appliance, consumer electronics and home office sales at Badcock while supporting greater furniture and mattress sales at Conn's.

It also improves the customer experience by expanding the in-store and online product assortment of the combined entity. As part of our complementary product categories, we also believe we can leverage both Conn's and Badcock's private label platforms to accelerate the growth of the combined business. As a reminder, Dreamspot is our private mattress brand that has quickly become the #1 selling brand within our mattress category, while our in-house Furniture brand, Villa Hill has become our fastest growing furniture brand. Badcock has been following a similar private label strategy for the past 5 years as a result, by combining the expertise and resources of both Conn's and Badcock we believe we can increase our overall capabilities to develop and implement private label products across multiple categories and drive additional revenue and margin opportunities. Second, Badcock provides a network of over 310 dealer-owned stores operated by more than 120 independent and local entrepreneurs. This is a compelling structure that allows dealers to thrive in their local communities while offering lower store start-up costs and faster store openings than corporate-owned stores. The Badcock maintains ownership of the inventory and consigned it to the dealers. Dealers are paid a variable commission based on sales and all credit origination and collection activities are centralized through the company's corporate office. Importantly, dealer-owned stores are typically smaller at around 17,000 square feet and are in more rural markets compared to Conn's average store size and footprint. We believe this provides meaningful opportunities going forward as we can greatly expand the product assortment, customer service and retail and credit capabilities of Badcock's dealer owned network.

In addition, we believe the transaction expands our long-term addressable market by allowing us to profitably enter rural and less populated areas especially in legacy Conn's markets such as the state of Texas. We are thrilled to welcome Badcock's dealers to Conn's, and I look forward to working with these committed business owners to help them grow. Leveraging e-commerce infrastructure is the third opportunity we are pursuing to accelerate the growth of the combined company.

Conn's has experienced strong e-commerce growth and robust customer adoption since accelerating investments in our online product, value proposition, digital experience and distribution capabilities. As a result, e-commerce sales have increased eightfold from $12.6 million for the year ended January 31, 2020, to more than $100 million on a trailing 12-month basis at the end of the most recent quarter.

Over the past 12 months, Badcock had e-commerce sales of approximately $24 million which we believe we can meaningfully expand by leveraging Conn's digital capabilities and best-in-class logistics network. As you can see, we believe there are multiple opportunities to drive retail sales within our combined footprint while leveraging our complementary businesses, similar product categories and customer profiles. There are also incredible opportunities to unlock revenue, cost synergies and portfolio management efficiencies by combining Conn's in-house credit platform and expertise with Badcock's existing financing capabilities, which is the next important strategic rationale I'd like to review today.

I am confident that Conn's credit infrastructure, combined with our full spectrum of payment options, our best-in-class solutions supporting a compelling and differentiated customer value proposition. As we look at Badcock's payment offerings, we believe there is a powerful opportunity to leverage Conn's in-house credit platform. Near-term initiatives include leveraging our prequalified direct mail and credit-based marketing expertise to drive sales of Badcock. Over the coming quarters, we will also transition Badcock's existing revolving in-house credit program to Conn's in-house term loan product, which we expect to enhance Badcock's credit yield and add incremental sales as well. In addition, we believe we can provide meaningful value to Badcock's customers by implementing Conn's recently launched digital application process.

This innovative program will make it easier for Badcock's customers to apply for the multiple payment options we provide while limiting the impact a credit application has on a customer's credit score. Since rolling out these enhancements earlier this year, Conn's fiscal 2024 9-month application volume has increased 26%, and we believe we can replicate this performance at Badcock. We also expect Badcock to benefit from Conn's 10-plus years of experience offering lease-to-own payment plans to our customers. While Badcock offers third-party lease-to-own plans, it currently represents only 3% of their sales compared to over 8% of Conn's sales at the end of the third quarter. Given Badcock's similar product categories, customer profiles and store locations, we believe there are material opportunities to drive lease-to-own sales at Badcock. I want to stress the importance of Conn's credit expertise, infrastructure and credit team. Not only do these resources support credit-driven revenue and cost synergies and but they also power sophisticated loan servicing, collections and recovery capabilities. We will leverage this established platform to prudently manage the performance of the combined portfolio in a stable manner while simultaneously pursuing significant credit-driven revenue growth opportunities. The next strategic rationale I'd like to review today is the powerful scale and platform this combination generates. Combined, we have created a leading home goods retailer with approximately $1.85 billion in revenue across more than 550 stores. Conn's also becomes the top 20 furniture and mattress retailer in the United States based on Furniture Today's latest top 100 list. As a larger furniture and mattress retailer, we believe we will benefit from purchasing and logistics synergies helping support higher retail gross margin in the future. In addition, the combination expands our reach throughout the Southeastern United States and into states like Florida and Georgia. These markets, like Texas, offer compelling demographics in our leading states for population growth and economic activity. Badcock's Florida and Georgia store base alone adds over 200 locations compared to 25 Conn's locations in Florida and Georgia prior to the transaction.

Badcock enjoys strong unaided brand awareness within Florida and Georgia that is similar to Conn's awareness in Texas. And combined, these 3 states will account for 55% of our store base and approximately 60% of our combined sales. We intend to operate both brands to take advantage of the leading awareness Conn's has in Texas and Badcock has in Florida and Georgia. In addition, we believe we can leverage Badcock's dealer model to enter smaller, more rural markets throughout our footprint. In Texas alone, there are over 75 municipalities with populations between 10,000 and 75,000 that we believe could support a dealer-owned store, a significant increase in our addressable market. The company will also have a meaningful e-commerce business with approximately $125 million of combined e-commerce sales. supporting our digital platform is a best-in-class logistics network that is positioned to provide last mile delivery to approximately 92% of the population that resides in the 15 states in which we operate.

In addition, Conn's in-house service platform provides us with another compelling offering to support online and in-store customers across our combined footprint. As a result, we believe we will have an even greater e-commerce value proposition, especially across Badcock's dealer network and in their more rural markets. Our credit segment will also see the benefits of scale. As a reminder, when I first joined Conn's as CEO in September 2015, and we started investing heavily to create a powerful credit and collections infrastructure. I am pleased with the progress we have made as we continue to enhance our credit segment and drive stable performance. With the addition of Badcock receivables, our portfolio has grown to $1.1 billion, and I am confident we can properly manage this increase within our existing infrastructure.

As we integrate Badcock's receivables into Conn's portfolio, we will remove costs associated with duplicative credit, underwriting and collection systems and associated expenses. We also believe we can optimize Badcock's credit programs through our innovative application process, lease-to-own capabilities and the in-house financing options. The fourth and final strategic rationale of the combination with Badcock are the opportunities to significantly strengthen our financial position. Over the near term, there are 2 main drivers.

First, we have identified over $50 million of cost savings that we expect to realize on a run rate basis in the next 18 months. Expected cost synergies include the benefits from improved procurement and logistics expenses as a larger company. In addition, we are focused on driving efficiencies across the combined organization, and we believe there are opportunities to reduce general and administrative as well as corporate and credit segment expenses. Second, the Badcock transaction strengthens our balance sheet by adding approximately $125 million of incremental liquidity to Conn's. This consists of additional collateral in the form of inventory and accounts receivable that will be added to our borrowing base. In conjunction with the transaction, we announced an amendment of our $555 million ABL facility with $400 million of such amount extended from March 2025 to December 2026. We will also continue to pursue periodic ABS transactions as we leverage our established and highly successful ABS program. This includes our most recent August 2023 ABS transaction, which was 10x oversubscribed and reflects the extremely strong demand for our bonds as well as our ability to access the capital markets even during challenging market conditions.

As a result, we believe we can be a more frequent ABS issuer, especially as our scale increases and the diversity of our receivables grow. With these actions, we have significantly improved our balance sheet, providing us with greater resources and flexibility to navigate the current economic environment and support the future growth and capital needs of our business. As you can see, Badcock is a transformative transaction that we expect will immediately improve our financial performance while creating a platform for significant long-term value creation. Over the near term, both Conn's and Badcock's leadership teams share a common vision to ensure a successful integration while positioning the company for long-term profitable growth. We have an integration strategy in place, and our team is committed on executing against this plan.

We believe the Badcock transaction complements the strategic priorities we have recently been pursuing, including our efforts to better serve our core credit constrained customers, expand our lease-to-own offerings and accelerate our e-commerce business. I am pleased with the progress Conn's made during the third quarter as credit applications increased 41% and e-commerce sales increased nearly 51% to a third quarter record. I want to reiterate the importance of the Badcock announcement as the transaction strategically benefits for critical areas of our business.

First, it accelerates Conn's growth opportunities. Next, it combines Conn's in-house credit platform and expertise with Badcock's existing financing capabilities. Third, it increases Conn's scale and expands our presence across the Southern United States. And finally, it strengthens our financial profile. The combination creates a powerful financial model and customer value proposition supported by our premium shopping experience, best-in-class payment offerings, leading e-commerce capabilities and unique dealer network. In addition, we expect our larger scale will benefit purchasing and logistics expenses while also driving opportunities to leverage fixed costs. As a result, we believe the transaction will significantly improve our profitability in the coming quarters. By fiscal 2026, which is just 2 years away, we believe we can achieve annual adjusted EBITDA of between $180 million to $220 million on total annual sales between $2 billion to $2.2 billion.

Finally, as you may have seen in yesterday's press release, I am pleased to share that I have officially [ reassumed ] the titles of President and CEO. This decision reflects my confidence as well as the Board's confidence in the direction Conn's was headed prior to the transaction and the incredible opportunity the transaction represents for our communities, customers, employees and shareholders. As you may remember, under my prior tenure as President and CEO, the company produced multiple record-setting years of profitable growth that I am focused on replicating as we integrate the transaction and execute against our strategic plan. I am also excited to introduce Tim Santo, Conn's Interim CFO.

Tim joined Conn's in April 2023 as the company's Chief Accounting Officer. He brings a wealth of accounting and financial expertise and prior to joining Conn's held executive level positions at PRA Group and GE Capital. Tim and Mitchell joined a highly experienced and motivated leadership team that is committed to creating real value for our shareholders. I believe strongly that Conn's and Badcock have the right strategy, resources and platform deliver on the goals we have laid out here today.

Together, we will have an even greater impact on the communities we serve, and I am excited by the opportunities we have in front of us to produce long-term value for our stakeholders. So with this overview, I'll now turn the call over to Tim.

T
Timothy Santo
executive

Thanks, Norm. I'm excited to join everyone on this morning's call and even more excited by the opportunities the Badcock transaction creates for the combined company. I believe there is a clear path for Conn's to deliver strong financial returns over the coming years, and I look forward to updating investors on the progress we are making on future calls.

Turning to our third quarter financial results. The fiscal 2024 third quarter was challenging, reflecting persistent industry headwinds, primarily associated with pulled forward demand because of consumer trends and government stimulus during the COVID-19 pandemic. On a consolidated basis, total revenues were $280.1 million for the third quarter representing a 12.8% year-over-year decline. For the third quarter, the company reported a GAAP net loss of $2.11 and per diluted share compared to a loss of $1.04 per diluted share for the same period in fiscal year 2023. As a reminder, reconciliations of GAAP to non-GAAP financial measures are available in our third quarter earnings press release that was issued yesterday.

Looking at the performance of our retail segment in more detail. Total retail revenues were $221.4 million in the third quarter. The 13.1% year-over-year decline in retail revenue was primarily driven by a 15% decline in same-store sales and partially offset by new store growth. Same-store sales during the third quarter were impacted by lower discretionary spending for home-related products following an extended period of excess consumer liquidity, which resulted in accelerated sales.

For the third quarter, Retail segment operating loss was $24.8 million compared to a retail segment operating loss of $17.7 million for the same period in fiscal year 2023. The greater year-over-year retail segment operating loss was primarily due to a decrease in revenue as described above, and higher SG&A costs, partially offset by an improvement in retail gross margin.

Turning to our third quarter credit segment performance. Finance charges and other revenues declined 7.6% year-over-year to $61.5 million, primarily due to a decline in the average balance of the customer receivable portfolio. Overall, credit trends remain stable, reflecting prudent underwriting strategies aimed at controlling risk during a more uncertain and economic landscape.

As a percent of the portfolio, the 60-day delinquency balance was 11% at October 31, 2023 compared to 12.2% at October 31, 2022. The balance of re-aged accounts as a percent of the portfolio was 18.1% compared to 16.5% for the same period in fiscal year 2023. For the third quarter of fiscal year 2024, net charge-offs as a percent of the average portfolio balance were 13.6% compared to 13.7% for the same period last fiscal year. The company reported a credit segment loss before taxes of $36 million in the third quarter compared to a credit segment loss of $11.8 million for the same period last fiscal year.

The greater credit segment loss before taxes was primarily due to higher interest expense as well as a reduction in our credit spread, which declined to 8.7% compared to 9.8% in the same period last fiscal year. With this overview and before we turn -- we open the call to questions, I want to turn the call back over to Norm to review some financial considerations related to the Badcock transaction and our high-level expectations for the fourth quarter.

N
Norman Miller
executive

Thanks, Tim. As we integrate Badcock and pursue our long-term strategic growth priorities, I want to review our expectations for the fourth quarter. First, it is important to consider that approximately 7 weeks of Badcock's financial results will be included in our fourth quarter.

Quarter-to-date, Conn's total sales have been trending down approximately 13%, and we expect this trend to continue through the fourth quarter. On a year-over-year basis, we expect fourth quarter consolidated revenue will benefit from approximately $58 million to $61 million of Badcock retail sales and approximately $10 million to $12 million of credit segment revenue. We remain focused on reducing SG&A but expect elevated SG&A in the fourth quarter associated with new Conn's stores, approximately 7 weeks of Badcock's SG&A expenses and onetime expenses associated with the transaction. We are excited to integrate Badcock into Conn's as the transaction immediately enhances our scale, strengthens our financial profile and creates a powerful foundation for the future.

Over the next several quarters, we are focused on accelerating sales growth by pursuing product, dealer, e-commerce, and credit-driven growth strategies while simultaneously increasing gross margin and reducing our operating expenses. As a result, in 2 years, we expect to achieve between $2 billion and $2.2 billion in annual revenue and $180 million to $220 million in adjusted EBITDA by fiscal year 2026.

We are working hard to position the company for long-term success and I look forward to sharing the progress we are making in our future calls. Finally, I want to share my thanks and appreciation to all our team members for their continued hard work, service and dedication. I also want to welcome Badcock's employees, their dealers, vendors and customers to the company. I look forward to working with all of you as we create significant value for our combined enterprise.

So with this overview, Tim and I are happy to take your questions. Operator, please open the call up to questions.

Operator

[Operator Instructions] Our first question is from Vincent Caintic with Stephens.

V
Vincent Caintic
analyst

Congratulations on the acquisitions. It looks very transformative and very helpful. I guess, first off, I was wondering if there's any help you can give us in terms of just the Badcock financial sense, we're trying to figure out how to think about 2024 modeling of EBITDA and so forth? Or maybe if you could give us what the performance was in 2023. Any help you could give us would be helpful.

N
Norman Miller
executive

Yes. We'll take that off-line with you. As you know, the have not been publicly traded here for the last 8 months or so when they were reported as a subset as a public company with FRG. So there's a lot of moving parts there with some of the sales of the portfolio that they've done transaction wise. So we'll talk with you off-line with that, Vincent, to help you with the modeling.

V
Vincent Caintic
analyst

Yes, that sound good. I figure for my last model on Badcock, there are probably some changes. So I appreciate that. In terms of some of the moving pieces, the finance receivables and that funding part of the Badcock business, so I appreciate that Conn's will be able to add your financing capabilities that since I think Badcock's [ furniture ] business maybe funding side was sold. But if you could talk about are you acquiring Badcock's finance receivables? And will everything be running on the Conn's platform going forward in terms of the funding side.

N
Norman Miller
executive

Yes. So over the past year, Badcock has sold off a significant part of their receivables. However, we are bringing over about $100 million of their receivables. We will continue to service in a servicer agreement the existing securitized that have been securitized privately their existing portfolio. So it's about $100 million of receivables that are coming over that we will manage going forward. And then obviously, we will be funding that. Ultimately, we will be moving them from -- once we get them integrated into the Conn's underwriting platform and the Conn's in house financing, which is a different product than what they currently operate on. Badcock currently operates with a revolving credit product, and we will move them to the Conn's installment loan product but that's going to take a number of months from an IT standpoint in order to get that fully integrated.

Ultimately, when we're able to do that, it will create -- it will give us the opportunity to increase through yield, number one. And then number two, it also -- it will be our installment product, as you know, Vincent, is a 36-month product versus the revolving credit is much shorter in duration, which is why in the investor deck we published this morning, you can see their average ticket is about 30% less than our average ticket in large part because of the type of credit product that we think we have a real opportunity installment product to lower the monthly payment options for the Badcock customer that ultimately will drive more sales and more options for the Bad cock customer as well.

V
Vincent Caintic
analyst

Okay. Perfect. And then the next question, so great to hear all of the funding actions you're taking with the ABS and ABL and so forth. Maybe if you could sum it up, like what are the -- what's your ability to originate how much is that expanding? And how much capability can you give to Badcock for growth from the year-over-year funding actions and the ability for you to fund in?

N
Norman Miller
executive

Yes. So as you know, Vincent, we've been a regular since I joined the company in 2015 is when we started doing ABS transactions, and we've done either 1 or 2 of them regularly. And been successful, as I mentioned in my prepared comments at the ABS market.

Our intention is that we will our ABL and [indiscernible] that we have gives us ample credit to be able to continue to not only fund the growth we expect from our business, but Badcock as well. we will begin securitizing the Badcock loans going forward in the future when they become on our platform. And our expectation is, instead of doing 1 to 2 ABS transactions a year will be more in the range of 3% to 4%, but confident that, that will not be a filter or something that will prevent us from accelerating our growth with the structure that we have in place.

V
Vincent Caintic
analyst

Perfect. And then the last one for me. I mean just taking a step back and if you can talk about the consumer -- the state of the consumer last quarter and what you're seeing so far this quarter in terms of their spending their credit during the holidays. And if there are any differences also between like when we think about a Conn's consumer versus a Badcock consumer.

N
Norman Miller
executive

Sure, Vincent. So first, I'll answer the last question first. The consumers are very, very similar. When you look at demographically, the cash-constrained customer worthy customer and Badcock is similar to our customer, which is why this transaction from a transformative standpoint and a strategic rationale standpoint, makes so much sense. We carry the same products. It's a similar customer. We're in similar geography. We have a very similar business model that's fueled and driven by the in-house financing. So in almost every single box, when you compare the 2 companies, the similarities are shocking. So that's number one. Number two, as far as the health of the consumer, as you well know, if you look at delinquencies on car loans on credit cards, personal loans, delinquencies are continuing to be pressured.

They're at 12-, 13-year highs from a macro standpoint. We have seen that as well in Conn's pressure from a delinquency standpoint, which has caused us to tighten Conn's financing in the last 3 to 4 months by about 850 basis points, being conservative there to ensure that we keep the portfolio in a stable place even if it cost us a little bit in sales in the short run. Having said that, we did see improvement from quarter 2 to quarter 3, slight improvement from same-store sales down 15%, [ further ] down 15. I will say, in the month of November, our same-store sales were improved even more. So we saw the consumer respond more. They were down 12.9% in the month of November, which from a same-store sales and a total sales standpoint at about down 10%, which is the best performance we've seen in about 18 months for the month of November. So we're encouraged by that. But I will tell you with inflation still being persistent, I'm still concerned over the next 6 months to 9 months with the consumers. So we're going to be taking a cautious approach, but we believe with our in-house financing and the benefits we have from a synergy standpoint with the 2 businesses, especially with the untapped opportunity in Badcock that -- then we have an opportunity to grow the combined business.

Operator

There are no further questions at this time. I would like to hand the conference back over to management for closing comments.

V
Vincent Caintic
analyst

Great. Okay. That's great to hear about that steady same-store sale improvement over the past couple of quarters and great to hear about the transaction.

Operator

There are no further questions at this time. I would like to hand the conference back over to management for closing comments.

N
Norman Miller
executive

Thank you. I would like to again acknowledge all of the -- both the Conn's employees for all their hard work and dedication here over this past quarter. I'd also like to welcome once again the Badcock employees, the dealers. We're so excited to have you alongside us here in the Conn's organization. We look forward to working with you, and we look forward to sharing with investors as the excitement builds here and sharing our exciting integration results in future quarters. Thanks, everybody. Happy holidays.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

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