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Conn’s crumbles 40% after swinging to Q3 loss, withdraws 2015 profit outlook

Last updated: 19:30 09 Dec 2014 GMT, First published: 20:30 09 Dec 2014 GMT

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Conn’s (NASDAQ:CONN), a furniture chain, plummeted 40 percent after posting a third-quarter loss and withdrawing its 2015 profit forecast.

Conn’s also said its chief financial officer had resigned as its mainly low-income customers struggle with credit payments.

Shares fell to $21 at 3:14 p.m. in New York.

Net loss was $3.1 million, or $0.08 loss per share, in the three months ended Oct. 31, compared with a profit of $24.4 million or $0.66 per share, a year earlier, the Woodlands, Texas-based company said in a statement today.

On average, eight analysts polled by Thomson Reuters expected the company to report profit per share of $0.68 for the quarter.

The retailer's lending business lost $33.2 million on an operating basis, compared with a profit of $10.4 million in the same quarter last year.

Provision for bad debts more than tripled to $72 million.

The company said the loss reflected "a more difficult credit collection environment."

Stagnant wage growth and higher food costs have crimped the purchasing power of lower-income families, forcing many to buy on credit that they have difficulty managing.

Third-quarter revenue totalled $370.1 million, below analysts' average estimate of $376.8 million.

The retailer in October announced a strategic review that it said could include splitting off its credit division. Today Conn’s said that process is ongoing and doesn’t have a timetable.

Conn’s, which operates more than 90 stores, in September had said it expected 2015 earnings excluding certain items of $2.80 to $3 a share.

Conn's announced the departure of Brian Taylor, the company's CFO. Effective immediately, the company has appointed Mark Haley as Interim CFO.

Conn’s opened six HomePlus-format stores during the quarter, including the new markets of Denver; Greenville, S.C.; and Charlotte, N.C. It also opened two additional Colorado stores last month, in Fort Collins and Colorado Springs, bringing the total store count to 91.

The chain plans to open 15 to 18 new stores and close two next year.

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