Is Conn’s Going out of business? Amidst speculations, the current status of Conn’s business is reassuring. With over 199 stores across the United States, the company shows no signs of quitting business.
Let’s explore the facts behind Conn’s presence in the home goods retail market.
Conn’s is not going out of business, but Conn’s CEO, Chandra Holt, has stepped down from her role and the company’s board of directors. This comes after just over a year in her position as the company anticipates a significant decrease in third-quarter revenue. The company has also withdrawn its financial guidance for fiscal year 2023. It expects a 21% to 23% decline in total revenue for the third quarter and a negative mid-single-digit operating margin.
Former CEO Norman Miller, now a board member, serves as interim CEO until a replacement is found. Miller, who led the company from 2015 to 2021, transitioned to board executive chairman in April 2022.
Miller previously served as executive vice president and chief merchandising officer at Walmart. With over 30 years of corporate experience, Miller serves as a member of the Conn’s board of directors.
The company planned to focus on improving margins and reducing costs. Complete third-quarter results were provided in early December 2022. As of 2022, Conn’s HomePlus operates over 160 stores across 15 states. It is headquartered in the Houston area.
What Type Of Business Is Conn’s?
Conn’s HomePlus is listed on NASDAQ under CONN. It is a unique retailer focusing on home goods like furniture, appliances, and electronics. Their goal is to enhance the joy of home living. It has over 170 stores spread across 15 states. Not only this, but it also has an online presence at Conns.com. Their team of about 4,000 employees is dedicated to assisting customers in creating homes they love. They provide access to top-notch products and offer next-day delivery. Besides, they present personalized payment choices, including their convenient in-house credit program.
What Are Some Fast Facts Of Conn’s
- Conn’s HomePlus runs 170+ stores across 15 states in the Southern U.S.
- They boast a workforce of over 4,000 employees.
- Their roots trace back over 130 years when they started as a minor plumbing and heating company in Beaumont, Texas.
- Their headquarters sit in The Woodlands, Texas, just outside Houston.
Where Is Conn’s Inc. Based and Where Does It Operate?
Conn’s Inc. is a United States-based furniture, mattress, electronics, and appliance store chain. It is headquartered in The Woodlands, Texas. The chain operates stores in various states, including:
- Alabama
- Arizona
- Colorado
- Georgia
- Louisiana
- Mississippi
- Nevada
- Florida
- New Mexico
- North Carolina
- Oklahoma
- South Carolina
- Tennessee
- Virginia
Texas: In Texas, Conn’s has a presence in regions including
- Greater Houston
- The Dallas/Fort Worth Metroplex
- Greater San Antonio
- Greater El Paso
- Greater Corpus Christi
- Southeast Texas
- South Texas
Conn’s Journey: A Brief History
In 1890, Edward Eastham started Eastham Plumbing and Heating Company in Beaumont, TX. The company later became Plumbing and Heating, Inc. under the ownership of First National Bank of Beaumont in 1931. Carol Washington Conn Sr. joined in 1933. Eventually purchasing and renaming it Conn Plumbing and Heating Company in 1934.
By 1937, Conn’s expanded into selling refrigerators and added gas ranges. The company relocated to 268 Pearl Street in Beaumont by 1940. C.W. Conn Jr. joined after the Korean War, founding Conn’s retail service repair subsidiary, Appliance Parts and Service, in 1962.
In 1964, he co-established Conn Credit Corporation for retail credit financing. Carlton Russell Sr. served as president from 1966 to 1976, overseeing the company’s growth to four stores with a $4 million sales volume by 1966.
Conn’s first out-of-state store opened in Lake Charles, Louisiana, in 1969. Conn Sr. passed away in 1975, and Carlton Russell Jr. became chairman. “Under Conn Jr.’s leadership, the first Houston location opened in 1983.
By 1993, Conn’s achieved a sales volume of $100 million and expanded to San Antonio. 1994, Thomas Frank Sr. became chairman, guiding the company’s growth to over $200 million in sales volume by 1997.
A reorganization in 1998 involved a new financial partner, The Stephens Group, Inc. Expansion continued in 1999 with a store in Baton Rouge, Louisiana. Later, it was followed by further stores in Austin, Corpus Christi, and the Dallas-Ft. Worth Metroplex in the early 2000s.
In 2012, Conn’s ventured into Arizona and expanded to Colorado, Tennessee, South Carolina, and Mississippi in 2014. Then, it reached a total of 125 retail locations across the U.S.
On November 25, 2003, Conn’s, Inc. went public, trading on the NASDAQ Exchange under the symbol CONN. Today, the company offers a range of products and services, including:
- Appliances
- Electronics
- Furniture
- Mattresses
- Additional services like distribution, financing, and insurance.
What Is The Conn’s Controversy?
On July 3, 2014, The New York Times featured Conn’s in their biweekly column “The Haggler.” The article stirred a social media response with the hashtag “#talktothehaggler.” A subsequent column on July 19 continued criticizing the company’s customer service.
On November 9, 2014, The Haggler reported that Conn’s did not respond to inquiries about allegations regarding their credit practices, leading to an ongoing lawsuit.
The Haggler, written by David Segal, revealed that bonuses for Conn’s top executives, including CEO Theodore M. Wright, COO Michael J. Poppe, and CFO Brian E. Taylor, were closely linked to the company’s operating income.
The lawsuit stated that Wright’s maximum bonus of $850,000 was tied to Conn’s booking of $165.8 million in operating income in 2014. The company nearly reached this target with $162 million. It resulted in Wright receiving an $820,000 bonus. The complaint also highlighted that Wright and Poppe sold Conn’s shares in 2013 when the plaintiffs claimed the shares were artificially inflated.
Wright, who had not sold any shares since 2007, sold enough in 2013 to yield $1.9 million, while Poppe cashed out $2.6 million the same year. This revealed how top executives at Conn’s benefited from the credit-for-all strategy through significant bonuses and well-timed stock sales.
Is Conn A Good Stock To Buy?
The Conn stock currently shows a sell signal from the short-term Moving Average. But there’s a buy signal from the long-term average. The stock has an overall buy signal since the short-term standard is higher than the long-term one. This indicates a positive outlook. If the stock gains further, it may encounter resistance around $4.86 from the short-term Moving Average. Conversely, on a decline, the long-term average at approx $3.73 may offer some support.
A break above the short-term average will trigger a buy signal. On the contrary, a break below the long-term average will indicate a sell signal. Additionally, there’s a buy signal from the 3-month Moving Average Convergence Divergence (MACD). However, some negative signs have been observed, impacting the near short-term outlook. A sell signal was issued from a pivot top point on Wednesday, January 10, 2024, resulting in a -4.73% decline. Further decline is expected until a new bottom pivot is identified.
It’s worth noting that volume decreased along with the price during the last trading day, which is technically positive. However, it’s essential to know that this stock may sometimes experience low liquidity, increasing the overall risk.
Understanding Conn’s Risks: Support Levels, Volatility, and Stop-Loss for Conn Stock
On the downside, the stock has support just below its current level at $4.48 and $4.27, backed by accumulated volume. When a store tests a support level, there’s a natural risk involved, as a break could lead to a decline to the next support level. For Conn, if the $4.48 support is breached, the following groups of help from accumulated volume will be at $4.27 and $3.81.
This stock is considered “very high risk .”This is due to its significant daily movements and periodic low trading volume. On the last day, the store had a $0.335 sign between high and low, representing a 7.01% change. Over the past week, the daily average volatility has been 5.89%.
Their suggested stop-loss is $4.58 (-5.26%). This is due to the stock’s high daily movements, indicating considerable risk. Additionally, a sell signal from a pivot top was identified a few days ago.
Conn’s Reports Q3 2023 Financial Results
Conn’s, Inc., a retailer specializing in home goods such as furniture, mattresses, appliances, and electronics, reported its financial results for October 31, 2023.
“We continue to focus on key strategies to enhance our retail performance and better cater to our core credit-constrained customers. During the third quarter, we observed significant year-over-year growth in credit applications and eCommerce sales. Despite these positive trends, our performance reflects ongoing challenges in the industry and a difficult economic landscape,” said Norm Miller, President and CEO.
The company also revealed a strategic transaction with W.S. Badcock LLC. It is a prominent home furnishings company in the Southeast U.S.
This collaboration brings together two well-established businesses, fortifying Conn’s financial standing. It also creates a leading home goods retailer with approximately $1.85 billion in retail sales.
Key Financial Highlights for Q3 2023
- Consolidated revenue dropped 12.8% to $280.1 million. This is due to lower net sales, reduced finance charges, and other payments.
- Same-store sales declined by 15.0%. It is showcasing a sequential improvement from the previous quarter.
- eCommerce sales surged by 51.0% to $26.3 million.
- Retail gross margin increased to 33.5%.
- Credit applications witnessed a significant year-over-year increase of 40.6%.
Q3 2023 Results
- Net loss for Q3 2023 was $51.3 million, compared to a net loss of $24.8 million in Q3 2022.
- Retail segment operating loss for Q3 2023 was $24.8 million, up from $17.7 million in Q3 2022.
- Credit segment operating loss for Q3 2023 was $13.4 million, compared to $0.3 million in Q3 2022.
- Credit revenues decreased to $61.5 million in Q3 2023, down from $66.6 million in Q3 2022.
Store and Facilities Update
- The company opened one new standalone store in Q3 2023. This brings the total store count to 176 across 15 states.
- During fiscal year 2024, eight standalone stores have been opened, with one more anticipated.
Liquidity and Capital Resources
- Completed an ABS transaction in August 2023, generating net proceeds of $266.2 million.
- As of October 31, 2023, the company had $144.2 million of available borrowing capacity under its $650.0 million revolving credit facility.
- The company remains committed to its strategic goals while navigating challenges in the retail industry and economic conditions.
Is Conn’s Financial Outlook Cause for Concern?
Currently priced at $6.5, CONN is facing a bearish trend, plummeting 90% from its peak of $80. The stock displays a consistent pattern of lower and lower highs over the past year, signaling a bearish trend.
Trading well below its 200-day moving average at $11, it aligns with a downtrend. The adage “Don’t try to catch a falling knife” aptly applies, suggesting caution. With a potential fall to $3, entering the stock is advised only if it surpasses $11. This indicates a trend reversal. However, investing in CONN raises concerns.
Quant issues a sell signal, and with a market cap of $157 million and a colossal debt of $972.3 million, financial strain looms.
Stagnant revenue growth over the last four years and an anticipated 18.6% drop in FY23 revenue pose challenges amid macroeconomic uncertainties. The EV/EBITDA (FWD) ratio is 26.8x, compared to the sector’s 8.9x. This indicates overvaluation with limited growth prospects.
Notably, intense competition in the consumer electronics and furniture market and substantial advertising costs pose risks, especially given CONN’s existing debt burden.
What Are Some Alternatives To Conn’s For Furniture And Appliances?
If you need alternatives to Conn’s for furniture and appliances, consider the following alternate options:
IKEA
A popular and affordable furniture retailer offering stylish options for every room. They also have home appliances like refrigerators and ovens.
The Home Depot
Home Depot is a home improvement store. It provides a range of furniture and appliances, including refrigerators, washers, dryers, and installation services.
Lowe’s
It is another home improvement store. It offers furniture and appliances, including refrigerators, washers, and dryers, with installation services available.
Wayfair
An online furniture and home decor retailer with a broad selection at competitive prices. They provide free shipping on orders over $35 and a 30-day return policy.
Amazon
An online retailer with a diverse range of furniture and appliances from various brands. They offer free shipping on many items and a 30-day return policy.
How Many Stores Does Conn’s Have?
As of November 16, 2023, 199 Conn’s stores are in the United States. Texas leads with the highest number, boasting 85 stores. This makes up around 43% of all Conn’s stores nationwide.
Texas has approximately one store for every 341,129 people, accounting for about 43% of Conn’s store count. Following Texas are Florida, with 20 stores (10% of the total), and North Carolina, with 14 stores (7%).
In Florida, you’ll find a store for every 1,073,900 people, representing around 10% of Conn’s total stores. Meanwhile, North Carolina has one store for approximately every 749,143 people. This makes up about 7% of Conn’s overall store presence.
The Bottom Line
Contrary to concerns, Conn’s is not going out of business; it’s very much in business and thriving. With numerous stores across the United States, Conn’s is a significant home goods retail sector player. There are no indications of financial distress or closures that would suggest the company is shutting down its operations.
The extensive network of over 199 Conn’s stores, as of November 16, 2023, showcases the brand’s resilience and continued presence in the market. With 85 stores, Texas spearheads Conn’s robust footprint, representing around 43% of the total stores nationwide. States like Florida and North Carolina also contribute to the company’s broad reach.
Conn’s enduring existence and substantial store count ultimately affirm its stability and ongoing success. The brand remains committed to serving its customers with a diverse range of home goods, from furniture and mattresses to appliances and electronics, dispelling any notions of an imminent business downturn. Conn’s stands strong, offering quality products and services to consumers across the United States.
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