Retail

Conn's Disappoints on Bottom Line, Names New Chairman

Chris Lange

Published: March 29, 2016 11:10 am

Last Updated: January 13, 2020 11:25 am

Conn’s Inc. (NASDAQ: CONN) shares tumbled after it reported its fiscal fourth-quarter financial results before the markets opened on Tuesday. The company said it had $0.11 in earnings per share (EPS) on $456.8 million in revenue. That compares to consensus estimates from Thomson Reuters that called for $0.28 in EPS on revenue of $455.78 million. In the same period of the previous year, it posted EPS of $0.48 and $426.75 million in revenue.

Consolidated revenues gained 7.0% due to an increase in retail revenue from the growth in the store fleet, partially offset by a decrease in same-store sales of 1.7%, as well as an increase in credit revenue from growth in the average balance of the customer receivable portfolio.

Same-store sales for the quarter increased 3.6%, excluding the impact of Conn’s strategic decision to exit video game products, digital cameras and certain tablets.

In terms of guidance for the fiscal year, the company expects total revenue growth in the mid-to-high single-digits and for same-store sales to range from down low single-digits to flat. The consensus estimates call for $1.72 in EPS on $1.83 billion in revenue.

Separately, Conn’s announced its board of directors succession plan. Norm Miller, president and CEO, has been named to succeed Theodore M. Wright as chairman, effective as of the conclusion of Wright’s current term ending in May 2016.

Miller commented on earnings:

Over the past four years Conn’s has evolved into a regional retailer providing a unique, compelling retail and credit offering to customers through our network of over 100 stores in 12 states. We remain confident in our market opportunity, our business model, and the value we provide our customers. Going forward, we are making strategic enhancements in our business to digest the rapid growth we have experienced and improve our infrastructure to produce consistent and predictable earnings growth. During fiscal 2017 we will make investments in IT, credit, and personnel to support our long-term goal of becoming a national retailer, while moderating our revenue growth plan to ensure a high level of execution.

On the books, cash and cash equivalents totaled $12.3 million at the end of the quarter, compared to 12.2 million in the same period of last year.

Shares of Conn’s were down 20% at $12.52 Tuesday morning, with a consensus analyst price target of $27.33 and a 52-week trading range of $11.49 to $43.95.