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Here's How Conn's (CONN) is Positioned Ahead of Q2 Earnings

Conn's (CONN) Q2 results are likely to reflect benefit from strong customer demand and progress on growth initiatives. Inflationary pressures and high...

This story originally appeared on Zacks

Conn’s, Inc. CONN is slated to report second-quarter fiscal 2022 results on Sep 1, before the opening bell. The specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products is likely to have witnessed revenue growth in the to-be-reported quarter. The consensus mark for fiscal second-quarter revenues is pegged at $399.8 million, suggesting growth of 9% from the prior-year quarter.

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings stands at 70 cents per share, which indicates a decline of 6.7% from the year-ago reported figure. However, the consensus mark has remained unchanged in the past 30 days.

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Conns, Inc. Price and EPS Surprise

Conns, Inc. Price and EPS Surprise

Conns, Inc. price-eps-surprise | Conns, Inc. Quote

Factors to Note

Conn’s has been gaining from favorable customer demand and progress on its strategic growth initiatives, which are likely to have contributed to same-store sales in the fiscal second quarter. Its point-of-sale financing model that offers affordable credit products to its core customers remains a growth driver. Higher retail sales stemming from its in-house credit offering and new credit strategies might have contributed to the to-be-reported quarter’s top line.

On its last earnings call, the company noted favorable initial fiscal second-quarter trends, with same-store sales having increased 10% driven by robust in-house credit and third-party lease-to-own sales. It also projected momentum in its lease-to-own sales to continue throughout fiscal 2021 and support total retail sales growth.

The company remains focused on enhancing its direct-to-consumer business and has been investing in the digital platform. It has been making efforts to improve its marketing strategy, and expanding the e-commerce team and omni-channel facilities. Brand awareness, next-day delivery and in-house service capabilities have been aiding results. Conn’s e-commerce business has been gaining from features launched in fiscal 2019, which enable online transactions with its in-house financing.

However, the company continues to reel under industry-wide supply-chain disruptions and inflationary pressures, which are likely to have affected the fiscal second-quarter results to certain extent. Management in its last earnings call expected SG&A expenses to rise in the quarters ahead due to increased investments in growth initiatives and new stores, partly offset by tighter cost controls.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Conn’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Conn’s carries a Zacks Rank #1 but an Earnings ESP of 0.00%.

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