Conn's (CONN) Misses Q1 EPS by $1.57, Revenues Beat

June 9, 2020 6:06 AM EDT
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Price: $19.63 --0%

Financial Fact:
Income before income taxes: -7.08M

Today's EPS Names:
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Conn's (NASDAQ: CONN) reported Q1 EPS of ($1.89), $1.57 worse than the analyst estimate of ($0.32). Revenue for the quarter came in at $317.16 million versus the consensus estimate of $300.19 million.

First quarter of fiscal year 2021 highlights include:

  • The majority of Conn’s showrooms remained open during the first quarter, and all showrooms are currently open
  • Retail sales were negatively impacted by more stringent underwriting standards, reduced store hours, social distancing programs limiting the number of sales associates and in-store customers and lower sales of discretionary categories
  • E-commerce sales increased over 700% to $5.4 million year-over-year as we were able to support higher demand for online and mobile purchases as a result of last year’s launch of our new e-commerce platform
  • Total credit applications increased 14.2% to 295,551 applications in the first quarter driven by strength in online applications
  • The balance of sale for Conn’s third-party financing and lease-to-own plans increased from the prior fiscal year demonstrating the Company’s diverse credit offerings and reflecting tighter underwriting of Conn’s in-house financing
  • Consolidated SG&A expenses declined 4.2% from the first quarter in the prior fiscal year, as a result of recent cost saving initiatives

“Our response to the COVID-19 pandemic is focused on protecting the health and safety of our employees and customers, while providing essential home goods and financial products to our communities. As an essential business, we have maintained store operations throughout the COVID-19 pandemic through a mix of modified operating hours and enhanced employee programs, including temporarily increasing hourly wages by $2 per hour to support our front-line employees and implementing a work from home program for our corporate teams, so that we may continue to assist our customers get the goods they need to shelter-in-place. In addition, we have implemented payment deferral programs to provide relief to credit customers who were economically impacted by COVID-19,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer. “The diversity of our retail products, financial offerings and distribution channels and resiliency of our associates allowed us to quickly respond to rapidly evolving market dynamics.”

“Our first quarter results reflect an increase in our allowance for bad debts of $65.5 million, or $1.76 per diluted share, associated with accounting for the COVID-19 pandemic under the new CECL accounting methodology. Despite the loss we recorded for the three months ended April 30, 2020, we generated operating cash flows of $152.5 million, an increase of over 200% from the prior fiscal year period. We also recently amended our revolving credit facility to help navigate the COVID-19 crisis and had total cash and available liquidity at June 5, 2020 of over $295.0 million.”

“While the near term remains uncertain as a result of the COVID-19 pandemic, we believe we will benefit from the investments we have made to our business over the past four years, our experienced management team and the diversity of our retail and financial products. I also want to thank all of our associates for their continued dedication serving our customers through these uncertain times,” concluded Mr. Miller.

For earnings history and earnings-related data on Conn's (CONN) click here.

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