Please ensure Javascript is enabled for purposes of website accessibility

Shares of Conn's Move 10% Higher After Sales Uptick

By Daniel Miller - Oct 24, 2017 at 1:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite losing nearly 100 selling days due to Hurricane Harvey, Conn's is seeing a rebound in sales during the back half of September and through October.

What happened

Shares of Conn's, Inc. (CONN 0.00%), a specialty retailer of furniture and mattresses, home appliances, home office products, and electronics, are moving 10% higher as of 10:40 a.m. EDT on Tuesday after the company released guidance that suggested sales were recovering from Hurricane Harvey.

So what

After Harvey caused such massive damage, management speaking of a sales rebound is clearly good news for investors as same-store sales during August and September were affected by nearly 100 lost selling days, in combination with reduced traffic. But by mid-September, the sales trends turned positive due to rebuilding activities in southeast Texas. October's month-to-date same-store sales in markets impacted by Harvey were up over 15%. Also, management noted that due to the requirement that all in-house credit customers have property insurance helped insulate the company's exposure to credit losses from Harvey -- and so far the stock price has proven resilient to Harvey news. 

A row of houses with flooding across the street and up to the houses

Image source: Getty Images.

Now what

Management now expects same-store sales for the third quarter of fiscal 2018 to decline between 5% and 9% but retail gross margins to remain strong around 39%. While the third quarter will include roughly $1.5 million of one-time hurricane-related costs, the fact that sales are rebounding and its business remains insulated from credit losses were enough to encourage investors.

According to Norm Miller, Conn's chairman, CEO, and president, "Current business trends indicate that Hurricane Harvey's impact on third quarter results will be limited, reflecting the resiliency of our business model and the value we provide customers. I remain encouraged by the long-term direction we are headed and continue to anticipate full-year profitability for fiscal year 2018."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Conn's, Inc. Stock Quote
Conn's, Inc.
$8.02 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.