Conn's Plunges 16% Following Top And Bottom Line Miss

Shares of Conn's Inc (NASDAQ: CONN) were trading lower by more than 16 percent early Thursday morning after the company reported its first quarter results.

Conn's said it lost $0.31 per share in the quarter on revenue of $389.1 million. Wall Street analysts were expecting the company to earn $0.06 per share on revenue of $392.6 million.

Total retail sales for the quarter grew 6.8 percent from a year ago due to new store openings but were offset by a decline of 1.3 percent in same-store sales. The retail segment's operating income for the quarter fell to $33.7 million from $42.58 million a year ago.

Credit revenue rose 5.5 percent from a year ago to $70.1 million due to an increase in the average receivable portfolio balance outstanding. Provisions for bad debt in the quarter rose $10.3 million from a year ago to $57.8 million.

Norm Miller, Conn's Chairman, Chief Executive Officer and President, commented, "Our results this quarter reflect the transition we are undergoing this year to transform our credit business. We have a strong, differentiated retail model that delivers an excellent value to our customers. Our work the past few years to revitalize our retail operation was highly successful, but changes in the underlying behavior of our customer base exposed the need for increased investment in credit risk management. We are temporarily slowing the pace of growth to allow us to implement strategies to turn around our credit segment's financial performance. These strategies include investments in our credit risk management team, improvements to our underwriting strategies and reviewing opportunities to increase the yield on the portfolio. It will take several quarters before the benefits of these efforts begin to meaningfully impact our reported results. I am confident we are headed in the right direction, and will end the year better positioned to achieve consistent and predictable earnings growth.

"As we focus on building out the infrastructure needed to support our growing retail and credit operations, having a strong, driven management team is paramount to delivering outstanding performance. I am pleased to announce the appointments of Lee Wright as our Chief Financial Officer and John Davis as Chief Credit Officer. They both present a unique mix of skills and experience with our customer base that will immediately enhance our financial and credit risk management teams. In addition, we've also announced the appointment of Mark Prior as our new General Counsel and the promotion of Mike Poppe to President and Chief Operating Officer of Credit and Collections.