Why Conn's Shares Are Booming

When Conn’s Inc. (NASDAQ: CONN) reported its fiscal first-quarter financial results before the markets opened on Thursday, the retailer said that it had $0.40 in earnings per share (EPS) and $358.4 million in revenue. Consensus estimates from Thomson Reuters had called for $0.27 in EPS on revenue of $354.84 million. In the same period of last year, Conn’s said it had a net loss of $0.05 per share and $355.83 million in revenue.

During the latest quarter, total same-store sales decreased 3.5% for the quarter.

In terms of its segments, Conn’s reported as follows:

  • Furniture and Mattress sales increased 2.7% year over year to $97.02 million.
  • Home Appliance sales decreased 2.6% to $78.02 million.
  • Consumer Electronics sales decreased 6.2% to $52.30 million.
  • Home Office sales increased 9.1% to $18.31 million.
  • Other sales decreased 14.0% to $3.66 million.

Looking ahead to the fiscal second quarter, the company expects to see same-store sales 0.0% to 3.0% higher. The consensus estimates are $0.44 in EPS and $376.86 million in revenue for the quarter.

The company opened two new Conn’s HomePlus stores in Texas in the first quarter, bringing the total store count to 118 in 14 states. During fiscal year 2019, Conn’s plans to open a total of five to nine new stores in existing states.

Norm Miller, Conn’s board chair and chief executive, commented:

Fiscal year 2019 is off to an excellent start.  First quarter retail results were driven by an improving same store sales trend.  This included positive same store sales for the month of April, which is the first positive month of same store sales in over two years.  In addition, retail results benefited from record first quarter retail gross margin.  Credit performance strengthened during the quarter, and our credit segment had its first quarter of operating income in four years.  With our credit platform on a clear path towards improved financial results, we continue to focus on driving sustainable growth in our highly profitable retail segment.  Our first quarter results reflect accelerating momentum throughout our business and we believe that fiscal year 2019 will be a strong year for the Company.

Shares of Conn’s were last seen up about 17% at $29.95, with a consensus analyst price target of $38.50 and a 52-week trading range of $16.50 to $37.80.