What: Shares of retailer Conn's (NASDAQ:CONN) declined by 21.1% in October, according to S&P Capital IQ data. While most of this loss has been erased in November, the reasons for the October decline are important for investors to understand.

So what: Conn's is unique in that it finances a large portion of its sales in-house. This business model ran into some major problems in 2014, as the rate of delinquencies began to soar. The stock has been on a roller coaster ride over the past two years, falling about 75% in 2014, then doubling during the first half of this year, and then falling another 50% since the beginning of July.

CONN data by YCharts

The company announced plans to securitize $1.4 billion of its debt portfolio in September, along with naming a new CEO. Delinquency rates have continued to rise, though, and the company announced in early October that its 60-day delinquency rate in September reached 9.9%, up 20 basis points year-over-year.

Conn's began tightening its lending standards in 2014 to counteract the rising delinquencies, and while same-store sales growth has slowed down to a crawl, with Conn's reporting a 2% decline in October, delinquencies continue to rise.

Now what: This concern about the company's delinquency rate and slowing sales growth cut the stock in half between the beginning of July and the end of October. So far in November, the stock has jumped on some news related to the company's credit facility, but the core problems at the company remain.

Going forward, Conn's will need to prove that it can bring down delinquency rates. The company is still opening stores at a blistering pace, which will expand its credit portfolio, but with the credit business currently posting losses, further tightening of credit standards may be necessary going forward. This could hurt same-store sales growth even further, making significant earnings gains difficult to achieve.

Timothy Green 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.