What happened
Shares of Conn's, Inc. (CONN -4.97%), 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.
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."
