Retail gross margin was 34.1% in the current-year quarter compared to 28.8% in the prior-year. Margin expansion was reported within each of the major product categories. Additionally, results were favorably influenced by sales mix, with the 50% increase in higher-margin, furniture and mattress sales outpacing the overall growth realized in the other product categories. The broad margin improvement across all categories was driven by the exit of low price-point, low margin products and continued focus on sourcing opportunities.Credit Segment Results The credit segment’s results, compared to the same quarter in the prior year, were impacted by:
- Lower servicing costs, attributable primarily to a reduction in staffing over the prior-year period;
- Lower borrowing cost, reflecting reductions in the effective interest rate on outstanding borrowings and the average level of debt outstanding;
- An increase in the provision for bad debts, driven by changes in expected charge-off trends and a 46% increase in customer receivable originations compared to the prior-year quarter; and
- A decline in portfolio interest and fee yield to 18.4%, due to a higher relative amount of short-term promotional receivables and increased charge-offs.