When Conn’s Inc. (NASDAQ: CONN) reported its fiscal third-quarter financial results before the markets opened on Tuesday, it posted a net loss of $0.12 per share and $376.8 million in revenue. Consensus estimates from Thomson Reuters had called for a net loss of $0.19 per share and revenue of $393.83 million. The same period of last year reportedly had $0.02 in earnings per share (EPS) and $395.23 million in revenue.
Total retail revenues were $308.4 million for the third quarter of fiscal 2017, a decrease of $14.7 million, or 4.5%, primarily a result of the decline in same-store sales, partially offset by new store openings.
Credit revenues decreased 5.2% to $68.4 million. The decrease in credit revenue was the result of lower credit insurance commissions due to higher claim volumes in Louisiana after the floods and lower average rates in new states.
In terms of guidance for the fiscal fourth-quarter, the company expects to see a change in same-store sales down about 10%, with the retail gross margin in the range of 37.0% to 37.5%. The consensus estimates are $0.13 in EPS and $453.44 million in revenue for the quarter.
On the books, Conn’s cash and cash equivalents totaled $59.07 million at the end of the quarter, up from $12.25 million at the end of the previous fiscal year.
Norm Miller, Conn’s chairman, CEO and president, commented:
Our credit operation is already benefiting from the fiscal 2017 underwriting refinements. Initial indications are encouraging as Conn’s experienced meaningful reductions in early stage delinquency and first pay defaults during the fiscal 2017 third quarter. In addition, we successfully implemented our Texas direct loan program ahead of schedule – it was fully operational across all 55 Texas locations by the end of October. As a result of the rollout, all of November’s Texas originations were under the direct loan program, which improved the APR on new originations to over 27%, an increase in excess of 500 basis points compared to September. We expect the direct loan program, planned changes in other states, and changes to no-interest programs will increase Conn’s overall yield by 600 to 900 basis points on new originations by the end of fiscal 2018.
Shares of Conn’s were up 11% at $12.44 Tuesday afternoon, with a consensus analyst price target of $12.88 and a 52-week trading range of $6.54 to $27.53.
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