Is Conn’s in Trouble After Q4 Earnings?

By Chris Lange Updated Jan 12, 1:45AM EST · Published Apr 5, 9:55AM EDT

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Is Conn’s in Trouble After Q4 Earnings? — © Thinkstock

Conn’s Inc. (NASDAQ: CONN) released its fiscal fourth-quarter financial results before the markets opened on Thursday. The company said that it had $0.56 in earnings per share (EPS) on $420.4 million in revenue, versus consensus estimates from Thomson Reuters of $0.54 in EPS on revenue of $428.69 million. The same period of last year reportedly had EPS of $0.05 and $432.81 million in revenue.

Total retail revenues were $334.5 million. The 6.1% decrease in retail revenue was primarily driven by a decrease in same-store sales of 8.0%, partially offset by new store growth. Sales for the three months ended January 31, 2018, were impacted negatively by the transition of its lease-to-own partner and general consumer softness along the Mexico border.

In terms of its segments, the firm reported the following:

Furniture and mattress sales dropped 3.9% year over year to $106.97 million.
Home appliance sales increased 0.9% to $84.49 million.
Consumer electronics sales fell 15.0% to $81.97 million.
Home office sales decreased 0.4% to $25.39 million.

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Looking ahead to the fiscal first quarter, the company expects to see same-store sales down 3% to 5%, with a retail gross margin between 38.5% and 39.0% of total net sales. The consensus estimates call for $0.35 in EPS on $367.13 million in revenue for the coming quarter.

On the books, Conn’s cash and cash equivalents totaled $9.3 million at the end of the quarter, down from $23.6 million at the end of the previous fiscal year.

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

Conn’s fiscal year 2018 financial results demonstrate the successful execution of the Company’s turnaround strategies and, as expected, a return to full-year profitability. Credit segment performance improved throughout the fiscal year as a result of higher finance charges, stronger portfolio fundamentals, controlled expenses, and lower borrowing costs. Conn’s retail segment ended the year with record retail gross margins. I am encouraged by the platform we have created and the positive momentum underway at Conn’s.

Shares of Conn’s were more than 14% lower early Thursday to trade at $30.75. The consensus analyst price target is $39.00 and the 52-week range is $11.30 to $37.80.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.