Macro headwinds remain intense and weigh on Conn's sales - Jefferies

Conn's

30/03/2023 12:12

** Brokerage Jefferies says Q4 results of Conn's Inc  CONN.O  reflected the challenging
macro backdrop weighing on the company's sales & credit
    ** Brokerage cuts CONN's PT to $10 from $12 after the home goods retailer on Wednesday
reported a bigger-than-expected Q4 loss hurt by higher distribution and freight costs
    ** Jefferies says over the near-term, it expects general and administrative (G&A), interest
and provision expenses growth would offset a potential sales recovery, weighing on CONN's
profitability
    ** Also adds a tighter credit environment and declining consumer credit scores increase the
need for CONN to check for financing alternatives
    ** However, Jefferies says if the retail business stabilizes, it sees good growth
opportunities, with low-single-digit same store sales growth and expense scaling driving
mid-teens EPS growth
    ** One of three brokerages rate the stock "strong buy" and two "hold"; with a median PT of
$8 - Refinitiv
    ** Up to Wednesday's close, stock had fallen over 9% so far in 2023

 (Reporting by Anne Florentyna Gnanaraja Sekar in Bengaluru)
 ((AnneFlorentyna.GnanarajaSekar@thomsonreuters.com;))