Home appliances and electronics retailer Conn's Inc (CONN.O) reported fourth-quarter revenue above Wall Street expectations, helped by higher demand for furniture and mattresses, and raised its adjusted profit forecast for fiscal 2014.
The company's shares rose as much as 14 percent to a life-high of $41.36 on the Nasdaq on Wednesday morning in heavy trading. They were trading up 10 percent at $39.86 later in the day.
Conn's, known for offering flexible credit options to its customers, has been increasing its focus on high-priced products such as furniture and mattresses to boost margins.
Margins on furniture and mattress sales rose 11.1 percentage points to 46.7 percent in the quarter. Retail gross margin increased 720 basis points to 36.9 percent.
"The 720 basis points increase is from a better mix shift due to Conn's efforts to increase its focus in furniture or mattress," David Magee of Suntrust Robinson Humphrey wrote in a client note.
The company also benefited from five new Conn's HomePlus stores, and it plans to open 10 to 12 more stores in fiscal 2014.
The company, which also sells lawn and garden products, now expects to earn between $2.40 to $2.50 per share in fiscal 2014, up from its previous expectations of between $2.05 and $2.15 per share.
Analysts were expecting earnings of $2.09 per share, according to Thomson Reuters I/B/E/S.
"While we had anticipated a guidance increase, the magnitude exceeded our expectations," Magee said.
Net income rose to $17.7 million, or 50 cents per share, in the quarter ended January 31, from $7.7 million, or 24 cents per share, a year earlier.
Revenue at the company, which competes with Hhgregg Inc (HGG.N) and Home Depot Inc (HD.N), rose 10 percent to $250.3 million.
Analysts on average had expected earnings of 56 cents per share on revenue of $246.9 million.
(Reporting by Arpita Mukherjee in Bangalore)