* Cuts 2015 earnings/share forecast to $3.40-$3.70 vs
* Estimates fourth-quarter adjusted earnings/share
$0.75-$0.80 vs est $0.93
* Shares fall as much as 37 pct
(Adds analyst comments, background; updates share movement)
By Maria Ajit Thomas
Feb 20 Electronics and home appliance retailer
Conn's Inc lost more than a third of its market value
after it cut its profit forecast due to bad debts and weaker
sales growth for TVs.
Conn's, which offers credit to customers, said delinquency
and charge-offs rose in December and January, leading to an
increased provision for bad debts in the fourth quarter.
Woodlands, Texas-based Conn's operates 79 stores in Texas,
Louisiana, Arizona, Oklahoma and New Mexico, catering mainly to
lower income shoppers.
Conn's reported weaker same-store sales trends in
electronics this year, in part due to higher prices for
televisions as suppliers cut back on promotions, and said it
expects this weakness to continue through the year.
"When vendors pull back, that means the retailer has to make
the choice of either selling (TVs) at a higher price or
sacrificing margins in order to get that sale ... Conn's was not
willing to take the margin hit," B. Riley & Co analyst Scott
The company has also been shifting its focus toward
higher-margin products such as furniture and mattresses and
reducing its dependence on consumer electronics.
Conn's estimated furniture unit sales growth of 29 percent
in the fourth quarter ended Jan. 31, and mattress unit volume
growth of 70 percent. Television sales are expected to rise only
by 17 percent.
Rival Hhgregg Inc in January reported a steep fall
in quarterly profit and slashed its fiscal 2014 earnings
forecast due to declining demand for televisions and tablets.
For the year ending Jan. 31, 2015, Conn's forecast earnings
of $3.40-$3.70 per share, down from a range of $3.80-$4.00
issued in December.
Analysts on average expect a profit of $3.96, according to
Thomson Reuters I/B/E/S.
For the fourth quarter, Conn's said it expected adjusted
earnings of 75-80 cents per share, far below the average analyst
estimate of 93 cents per share.
Conn's estimated net sales of $301.6 million for the fourth
quarter, below analysts' estimates of $361.5 million.
Conn's shares were down 33 percent at $37.34 in heavy
trading on Thursday. More than 12 million shares changed hands
by 10:40 am ET, 11 times the 10-day average volume.
B. Riley's Tilghman, however, said the stock plunge was
"overdone" as he expects the credit business to improve by the
second or the third quarter.
(Reporting by Maria Ajit Thomas in Bangalore; Editing by Rodney
Joyce and Saumyadeb Chakrabarty)