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Conns Down on Soft January & Q4 Comps, Delinquency Data

Shares of Conns Inc.CONN dropped 5.6% after the company released soft comparable store sales (comps) numbers for the month and quarter ended Jan 31, 2016, alongside reporting a rise in delinquency rate.

Total retail sales for January advanced 7.9% year over year to $101.0 million, while comps for the same period slipped 2.3%.

Conns' comps for the month continued to be impacted by the company's recent decision to discontinue its video game products, digital cameras, and certain tablets. Excluding the effect from the discontinuation of these products, Conns' January comps inched up 0.6%.

Further, the greater than 60-plus day delinquency rate of this Zacks Rank #5 (Strong Sell) company expanded 20 basis points year over year, while it remained flat sequentially, at 9.9% as of Jan 31, 2016.

Coming back to sales results, segment-wise, the Furniture and mattress segment posted comps growth of 12.3%, while comps at the Home appliance, Consumer electronics, Home office, and other segment, declined 0.3%, 15.7%, 11.0% and 13.9%, respectively.

While the Furniture and mattress segment continued to gain from enhancement of furniture assortment, the consumer electronics segment was adversely impacted by the unfavorable shift of Super Bowl by a week. This caused television sales to shift to the first week of February.

Moving to the fourth quarter of fiscal 2016, total retail sales augmented 7.4% to $376.5 million, while comps for the quarter dipped 1.7%. Excluding the effect from the discontinuation of video game products, digital cameras, and certain tablets, Conns' fourth-quarter comps grew 3.6%.

Segment-wise, fourth-quarter comps for the Furniture and mattress division surged 15.2%. On the contrary, at the Home appliance, Consumer electronics, Home office, and other segment, comps went down 1.2%, 13.3%, 11.3% and 17.8%, respectively.

Apart from the decision to exit the aforementioned products, quarterly sales continued to be hampered by significant oil industry concentration in various markets. However, management stated that Conns' sales performance has been gaining stability over the past few months.

Finally, comparable sales from repair service agreement commissions declined 1.5% for January, while the same edged up 0.6% for the fourth quarter of fiscal 2016.

Stocks to Consider

Better-ranked stocks in the retail sector are Dollar Tree, Inc. DLTR , Ross Stores Inc. ROST and The Kroger Co. KR , each with a Zacks Rank #2 (Buy).

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CONNS INC (CONN): Free Stock Analysis Report

DOLLAR TREE INC (DLTR): Free Stock Analysis Report

ROSS STORES (ROST): Free Stock Analysis Report

KROGER CO (KR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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