- Conn's ( NASDAQ: CONN ) stock slid sharply on Tuesday after the company posted miss on both lines with same store sales down 22% year-over-year in its Q2 2023 earnings release .
- The Texas-based speciality retailer reported revenue of $346.63M (-17.1% Y/Y), missing consensus by $23.6M .
- Retail segment sales dropped 19.4% Y/Y to $279.51M. The break-up reflected Furniture and Mattress sales -21%; Home appliances which contributed 43.2% of retail sales declined 10.9% Y/Y; Consumer electronics, -34.2%; Home office, -50.8%; and service revenue, -13.8% Y/Y.
- The retail's operating income crashed drastically to $0.1M vs. $28.7M in a year-ago quarter. On adjusted basis, it stood at $1.4M.
- Decline in same store sales is blamed to tightening of underwriting standards by the company's lease-to-own partners.
- Credit segment revenue was $66.8M (-6.4% Y/Y).
- Provision for bad debts increased to $26.8M for the quarter compared to $10.1M for the three months ended July 31, 2021.
- "Challenging macroeconomic conditions continued to pressure consumer spending during our second quarter, which disproportionately affected year-over-year sales to our financial access customer segment and sales of our discretionary product categories," commented CEO Chandra Holt.
- However, the company saw an uptick in digital sales as eCommerce revenue rose 11.5% to a second quarter record of $19.3M.
- Q2 2023 Non-GAAP EPS of $0.04 missed consensus by $0.05.
- The retailer has added two new standalone stores bringing the total number of stores at July 31, 2022 to 163 and added four store-within-a store locations with Belk.
- On July 21, 2022, Conn's completed an ABS transaction resulting in the issuance and sale of approximately $407.7M in aggregate principal amount of Class A and Class B Notes and ended the second quarter with over $211M of available liquidity and cash.
- Outlook: The company expects current initiatives to generate cost savings of approximately $12.0 - $16M in the 2H 2023.
- Also, Conn’s expects to reduce investments in capital expenditures for fiscal year 2023 by approximately $20M.
- CONN stock is down 6% to trade at $10.64 on Tuesday vs. 52-week range of $7.80 to $28.
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Conn's tumbles after lower same store sales, earnings miss disappoint investors