Hot Stocks Alert – Conn’s Inc (NASDAQ:CONN)
On Tuesday, Conn’s Inc (NASDAQ:CONN) showed bullish trend with higher momentum of 28.99% to close at $10.90. The company traded total volume of 4.76 million shares as contrast to its average volume of 429,357 shares. The company has a market value of $324.83 million and about 30.86 million shares outstanding. During the 52-week trading session the minimum price at which share price traded, registered at $6.54 and reached to max level of $15.77.
Conn’s, Inc. (CONN), a specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products, and provider of consumer credit, recently declared its financial results for the fourth quarter ended January 31, 2017.
Retail Segment Fourth Quarter Results (on a year-over-year basis unless otherwise noted):
Total retail revenues were $356.20M for the fourth quarter of fiscal year 2017, a decrease of $20.70M, or 5.50% from the fourth quarter of fiscal year 2016, mainly resulting from the decline in same store sales partially offset by new store openings. Sales were negatively influenced by underwriting changes made in the fourth quarter of fiscal year 2016 and during fiscal year 2017. For the fourth quarter of fiscal year 2017, retail segment operating income was $56.10M, and adjusted retail segment operating income was $57.20M after apart from net charges of $1.10M mainly associated with an adjustment to our sales tax reserve.
The following provides a summary of items influencing Conn’s product category performance during the fourth quarter of fiscal 2017, contrast to the prior-year period:
- Furniture unit volume reduced 18.40%, partially offset by a 9.10% increase in average selling price;
- Mattress unit volume reduced 13.50%, partially offset by an 11.90% increase in average selling price;
- Home appliance unit volume reduced 6.90% and average selling price reduced 3.0%;
- Consumer electronic unit volume reduced 9.70%, partially offset by a 3.60% increase in average selling price; and
- Home office unit volume reduced 13.60% and average selling price reduced 5.50%.
Credit Segment Fourth Quarter Results (on a year-over-year basis unless otherwise noted):
Credit revenues reduced 4.1% to $76.60M. The decrease in credit revenue was the result of both lower credit insurance commissions because of higher claim volumes in Louisiana after the floods and lower origination volume and the lower yield rate of 16.50%, which were 40 basis points lower than the prior year quarter. The total customer portfolio balance was $1.60B at January 31, 2017, declining 2.0%, or $31.40M from January 31, 2016.
Provision for bad debts for the fourth quarter of fiscal year 2017 was $72.10M, a boost of $7.60M from the same prior-year period. The increase was mainly driven by an $11.50M increase in charge-offs, net of recoveries, offset by a $3.90M decrease in the provision related to the change in the allowance for bad debts.
Fourth Quarter Net Income Results:
For the fourth quarter of fiscal year 2017, we stated a net loss of $0.10M or $0.00 per diluted share contrast to net income for the fourth quarter of fiscal year 2016 of $1.10M or $0.03 per diluted share. On a non-GAAP basis, adjusted net income for the quarter of fiscal year 2017 was $1.50M or $0.05 per diluted share, which excludes credits from legal and professional fees associated with securities-related litigation, an adjustment to our sales tax audit reserve, executive administration transition costs and certain non-recurring discrete tax items. This compares to adjusted net income for the fourth quarter of fiscal year 2016 of $3.50M or $0.11 per diluted share, which excludes legal and professional fees related to the exploration of planned alternatives and securities-related litigation, sales tax audit reserves, and executive administration transition costs.
Store Update:
During the fourth quarter of fiscal year 2017, the Company opened no new stores. During fiscal year 2017, we opened 10 new stores. We presently plan to open three new stores during fiscal year 2018, two of which were opened in North Carolina in February.
Liquidity and Capital Resources:
As of January 31, 2017, the Company had $161.50M of right away available borrowing capacity under its $810.0M revolving credit facility, with an additional $465.80M that could become available upon increases in eligible inventory and customer receivable balances under the borrowing base.
On March 31, 2017, the Company executed an amendment to its revolving credit facility, which, among other things, extended the maturity by one year to October 30, 2019, adjusted certain financial covenants and definitions, and reduced the size by $60.0M from $810.0M to $750.0M.
Outlook and Guidance:
The following are the Company’s expectations for the business for the first quarter of fiscal year 2018:
- Change in same store sales down mid-teens;
- Retail gross margin between 37.50% and 38.0% of total net retail sales;
- Selling, general and administrative expenses between 30.50% and 32.0% of total revenues;
- Provision for bad debts between $56.0M and $60.0M;
- Finance charges and other revenues between $74.0M and $78.0M; and
- Interest expense between $22.50M and $24.0M.
The Company offered net profit margin of -1.50% while its gross profit margin was 45.30%. ROE was recorded as -4.60% while beta factor was 1.27. The stock, as of recent close, has shown weekly upbeat performance of 29.76% which was maintained at -13.83 % in this year.