Are Investors Too Bearish on Conn's Q2?

When Conn’s Inc. (NASDAQ: CONN) reported its fiscal second-quarter financial results before the markets opened on Thursday, the furniture and appliances retailer posted $0.70 in earnings per share (EPS) and $366.92 million in revenue. That compared with consensus estimates of a net loss of $0.13 per share and $377.68 million in revenue, as well as the $0.62 per share and $401.06 million posted in the same period of last year.

Retail revenues were $279.7 million, a decrease of $26.4 million, or 8.6%. This was driven primarily by a 13.2% decrease in same-store sales, partially offset by new store growth. The decrease in same-store sales reflects proactive underwriting changes and industrywide supply chain disruptions, each of which was the result of the COVID-19 pandemic.

Separately, Credit revenues were $87.0 million, a decrease of $7.8 million year over year, or 8.2%. Cash and third-party sales grew 51% compared to the prior fiscal year period reflecting strong demand for home-related products. At the same time, e-commerce sales grew 72% year over year.

On the books, Conn’s cash and cash equivalents totaled $6.39 million at the end of the quarter, up from $5.49 million at the end of the previous fiscal year.

The company did not issue any guidance for the fiscal third quarter, but this is not uncommon as COVID-19 has created much uncertainty in the market. Consensus estimates call for a net loss of $0.06 per share and $352.02 million in revenue for the quarter.

Conn’s stock traded down more than 12% to $12.00 on Thursday, in a 52-week range of $2.83 to $27.57. The consensus price target is $12.17.

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