Conn's shares slide 32% as KeyBanc downgrades following mixed quarter

Tue, 10 Dec 2019 19:22:57 GMT

KeyBanc downgraded the stock of furniture retailer Conn's Inc. to sector weight from overweight on Tuesday, after a mixed third-quarter that included a better performance from its credit portfolio and lower-than-expected sales of consumer electronics. "Following a successful turnaround of its credit operations, CONN is working to drive growth in its retail segment, but is still seeing challenges," analyst Bradley Thomas wrote in a note to clients. "While we remain optimistic that retail initiatives will ultimately bear fruit, we downgrade CONN to SW from OW as we await signs of improved traction." Conn's beat on per-share earnings, thanks to strength in the credit segment and a lower tax rate. But management has tightened underwriting for new and online customers, reducing comparables by about 4.5%, said the analyst. "On the retail side, comps declined 8.4%, which represented a deceleration in trends which was below the guidance of -3.0% to 1.0% (and against a tough Hurricane Harvey comparison), due to the aforementioned factors," said the note. Shares were down 32%, and have fallen 26% in 2019, while the S&P 500 has gained 25%.

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