It was a tale of two consumer-electronics retailers last week. It was the best of times for Conn's (NASDAQ:CONN), as its stock soared 26% higher last week. It was the worst of times for hhgregg (NASDAQOTH:HGGGQ), surrendering nearly 15% of its value on the week.
A poorly received quarterly report tripped up hhgregg. Ammending a revolving credit facility to give it more wiggle room in its borrowing pushed up shares of Conn's.
The two big-box retailers didn't move in different directions just last week. The divergence has been taking place all year, with shares of Conn's up 32% through Monday's close and hhgregg stock surrendering 41% of its value.
It wasn't always that way. Both stocks were market beaters in 2013. Conn's saw its stock soar 157%, with hhgregg scoring a beefy 99% advance. The housing boom was igniting a rally in furniture and home-theater gear, and the mobile-computing revolution was drawing customers clamoring for tablets and smartphones. Conn's stock had more than doubled in each of the two previous years. It was a great time to be a consumer-electronics retailer.
Last year was another story. Conn's set its shareholders back by 76%, more than offsetting the prior year's gain. The 46% drop at hhgregg was nearly enough to erase the near-double it scored in 2013. Sluggish sales trends in some categories and credit concerns at Conn's doomed the retailing niche. We've seen Conn's begin to claw its way back in 2015, but hhgregg is practically guaranteed to turn in back-to-back years of sharp declines for its shareholders.
Last week's quarter was another dud for hhgregg. A 3.5% decline in comps was fueled by dips in consumer electronics, as well as computers and tablets that were only offset by slight gains in appliances and home products. It posted another loss for the period. It has served up wider deficits than expected in three of the past four quarters.
The mood is clearly better at Conn's, but it's not exactly out of the woods just yet. It amended its $810 million asset-based revolving credit facility, modifying its leverage ratio content in a way that will allow it to borrow more money. The greater operating flexibility is welcome, but Conn's still has a problem with deadbeat customers. Its delinquency rate inched up to 10.2% by the end of October, and that's something that will have to get better if Conn's wants to hold on to last week's -- and this year's -- gains.
Conn's and hhgregg have stock charts moving in different directions, but both retailers still have a lot to prove as we head into the telltale holiday shopping season.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.