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Shares of Conn's, Inc. Drop 13% After Mixed Fourth-Quarter Results

By Daniel Miller – Apr 5, 2018 at 12:33PM

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Here's a look at Conn's mixed results, management's comments, and what investors should remember about today's 13% decline.

What happened

Shares of Conn's, Inc. (CONN -8.17%), a specialty retailer selling consumer goods in the range of furniture, mattress products, appliances, electronics, and home office products -- it also has a credit business segment to provide solutions for constrained consumers -- are down 13% as of 11:13 a.m. EDT, after the company announced mixed fourth-quarter results and disappointing guidance.

So what

Conn's fourth-quarter revenue checked in at $420.4 million, which was below the prior year's $432.8 million and fell well short of analysts' estimates calling for $429.9 million. Despite the top-line miss, adjusted earnings per share checked in at $0.56 per share, just edging out analysts' estimates calling for $0.54 per share.

"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 under way at Conn's," said Norm Miller, Conn's Chairman and chief executive officer, in a press release.

Man looking at mattress tag in furniture store.

Image source: Getty Images.

Now what

As Miller stated above, Conn's managed to post a net income of $3.2 billion, compared to last year's loss of $74,000, but there is a lot of work to be done on the turnaround. Same-store sales dropped 8% during the fourth quarter, steeper than expectations of a 5.3% drop. If the company can reverse its same-store sales declines while improving profitability, it will go a long way to improving quarterly results throughout 2018. Investors also have to keep in mind that shares of Conn's are up roughly 191% over the past 12 months and anything short of a blockbuster quarter could have weighed on shares today.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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