Norman Miller: Thank you. I’m glad to be back.
Brian Nagel: So that’s my — really that’s my kind of opening to my first question. It’s — you’ve been around the business for a while. Obviously, you’ve been on the Board. I guess I’ll make it a 2-part maybe. What brought you back to an operational role. And as you look at the business now, obviously against a very fluid macro backdrop, from your vantage point, again, given your knowledge of the business, what are the levers that you and the team can pull here to stabilize the business and given all that’s going on?
Norman Miller: Yes. Thanks, Brian. So what brought me back, obviously, as we’ve reported the performance of the company this quarter and over the past couple of quarters, it certainly has not met the Board’s expectations performance-wise. And frankly, we believe and I believe strongly that our value proposition across the credit spectrum with our Conn’s core financing customer, the lease-to-own customer, all of our credit offerings, I think they resonate with the consumer strongly. And I would tell you, in this uncertain macro environment, having lived it before with this consumer back in The Great Recession of 2008 and 2009, it will — it should create opportunities for us from a sales standpoint as people look for more opportunities from a credit standpoint.
So now having said all that, a number of the things that have been put in place strategy-wise, such as to grow that fast and reliable, that high credit quality customer, I still think that, that’s a strong — that we offer a strong value proposition for that consumer as well with our products and our pricing. So it’s not about trading one for the other. That was — that’s been part of our struggle here over the past year. We’ve — we certainly have grown that fast and reliable, but have lost the level of focus on the Conn’s core finance customer and the lease-to-own customer. So really, our mission going forward, especially in this macroeconomic environment is how do we continue to capture that high credit quality customer, but also double down on where our bread is buttered, which is the Conn’s core finance customer.
And as we bring lease-to-own in-house and are able to create the synergy with Conn’s financing and lease-to-own, that should be 60%, 65% of our business and growing. That refocus on that customer in this environment is just a significant opportunity for us.
Brian Nagel: Okay. That’s really helpful. And I guess, it’s a follow-up to that. With the core, the legacy business of Conn’s, has anything changed competitively for the better or for the worse that could interrupt the ability of Conn’s to push more aggressively — more constructively back into that market?
Norman Miller: What I would — yes, that’s a great question, Brian. What I would say is there — certainly from when I came to the company back in 2015, there are certainly more credit offerings across the credit spectrum, especially on the lower end, the lease-to-own side of the house and I would say even a greater emphasis on the higher — on credit options at the higher credit quality as well. So that is — on both ends of the spectrum, that is far more competitive, I would say, than it was back 7 or 8 years ago. Consumers are aware of more options on both ends of those spectrum. But within that 50% — 55% of our business that’s in that 550 to 650 FICO customer base — or FICO score, there are not as many credit options there.
That’s still a significant differentiator for us in the marketplace. Now as part of the reason bringing lease to own in-house is because of the competitive nature that’s out there, our ability to leverage our credit infrastructure and be able to bring that lease-to-own in-house and couple it with Conn’s financing, we think it’s going to be greater than 1 plus 1. It’s a multiple effect when you bring those 2 together under the same underwriting model and enable us to offer a variety of credit options for those consumers, certainly below the 650 FICO. Now we’ll still have the high credit quality options with our Synchrony partner and the cash option as well. But our differentiator is going to continue to still exist in the marketplace in that sub-650 FICO score and below.
And it will be, I think, stronger once we have that in-house LTO offering to couple with our Conn’s financing.
Operator: Our next questions come from the line of Vincent Caintic with Stephens.
Vincent Caintic: Norm, it’s great to hear all the details of the strategic focus, especially on the finance customer. I was wondering if you could maybe go into some of the near-term priorities and particularly any milestones that we can be looking for in the near to medium term, especially as we’re going through this fluid macro environment.
Norman Miller: Sure. So what I would say is from a near-term standpoint, as we mentioned in the prepared remarks, the 2 key strategic initiatives that we’re executing on right now is the eCommerce platform transition, which as we said in the prepared remarks, is almost complete. We’re in the very, very last phase. All of our transactions as of the first part of November, are now being transacted on the new platform and very pleased with what we’re seeing performance-wise there. As you know, any time you go through an eCommerce transition from a platform standpoint, there’s typically a significant disruption. We clearly saw our eCommerce sales down 9% for the quarter. But the positive — from a positive standpoint, as we look at just the month of November, when all the transactions were on, we actually had slightly positive growth in eCommerce sales in November.
So as that — as we continue to — as we finish that transition and continue to build on that going forward, we think we have significant opportunity for that to be a huge growth driver for us, not only in the next fiscal year, but over the next 2 to 3 years, as you look at our conversion rates for the key products we carry versus the rest of the marketplace. The second key initiative is really around the lease to own, bringing it in-house. And even prior to my leaving and stepping back on the Board, back in — 15 months ago, I was a strong believer on the Board and proponent of moving to an in-house lease-to-own solution. Because I believe with our differentiated credit infrastructure and the team we’ve built from both an underwriting and a collection standpoint, bringing that critical segment of the customer base, which should be 10% to 15% at a minimum of our sales in line with our Conn’s financing and being able to underwrite that all as one group, I think, creates significant opportunity for us from a growth standpoint.
I’d refer you to the investor deck presentation that we released earlier today and Slide 5 that shows our sales funnel. And if you see, out of the trailing 12 months, 1.1 million people submitted credit applications, whether online or in our stores, and we approved 460,000. But that means 58% we declined or 640,000 applications, those are ripe opportunities that we’re capturing some of those with our lease-to-own partner. But we think with an in-house product that we’ll be able to capture materially more of those 640,000 declined applications. So those are the 2 key short-mile markers, if you will, over the next certainly 180 days that the team is very, very focused on executing against.
