Conn's (CONN) reported earnings Tue 4 Apr 2017 (b/o)

** charts before earnings **

** charts after earnings **

 

Conn's beats by $0.23, misses on revs:

• Reports Q4 (Jan) earnings of $0.05 per share, excluding non-recurring items, $0.23 better than the Capital IQ Consensus of ($0.18); revenues fell 5.3% year/year to $432.8 mln vs the $440.37 mln Capital IQ Consensus. 
• FY17 Guidance: Change in same store sales down mid-teens; Retail gross margin between 37.5% and 38.0% of total net retail sales. Conn's expects to return to full year profitability in FY18
• "Conn's retail business had a strong fourth quarter, despite the approximately 1,000 basis points impact underwriting refinements made earlier this fiscal year had on same store sales. We do not believe there was any material negative impact on retail or credit trends in the fourth quarter as a result of October's implementation of the direct loan program in Texas. Favorable mix within product categories and lower warehouse, delivery, and transportation costs improved retail gross margin 280 basis points compared to the fiscal 2016 fourth quarter, and 140 basis points from the fiscal 2017 third quarter. Retail operating margins in the 2017 fourth quarter were 15.7%, compared to 11.9% for the same period last fiscal year, as a result of record quarterly gross margins and a 6.7% decline in SG&A expenses."
• "Overall credit results continued to be impacted by slower growth, changes in credit strategy, and the performance of accounts originated under prior underwriting standards. As expected, a cohort of late stage delinquency went to charge-off in the fourth quarter, which impacted the fourth quarter's provision rate. Additionally, charge-off and provision may remain elevated in early fiscal 2018 as legacy accounts either mature or charge-off. We are optimistic overall credit results will improve throughout fiscal 2018, as these legacy accounts leave the portfolio and are replaced with accounts benefiting from tighter underwriting and higher yields."
• While we still have more hard work in front of us, we expect financial results to continue improving throughout fiscal 2018 and beyond. Based on our current outlook, we expect to return to full year profitability in fiscal 2018."