Bear Of The Day: Conns

Times are changing. American consumers are changing the way that they shop for the holidays and everyday items. Rather than rushing into brick and mortar retailers, mobile shopping and online is taking over. In fact, over the most recent Black Friday weekend more shoppers clicked their way to items than bricked their way to items. That is, more people shopped and purchased online than in stores. Looks like the retailers are becoming giant showroom floors for the likes of Amazon, eBay and other online shopping sites.

So today’s Bear of the Day is one of these brick and mortar retailers that’s just not cutting the mustard as of late. Conn’s (CONN – Snapshot Report) operates as a specialty retailer of durable consumer goods and related services. The company’s stores provide home appliances, home furniture, mattresses, home office products and consumer electronics. The company operates about 100 stores in Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas.

The story at Conn’s is similar to other retailers around the country. It’s tough for the brick and mortar stores to keep up with companies that have an online presence and don’t have the overhead of a physical location. The analysts have taken note and dropped their earnings estimates for the current quarter, current year and next year. The result has dropped our Zacks Consensus Estimates substantially for all three of these periods.

Over the last ninety days, our Zacks Consensus Estimate for the current quarter has gone from 65 cents down to 29 cents. The current year number has plummeted from $1.96 to $1.27 while next year’s number has gone from $2.76 to $2.05. The negative revisions are a big reason for the Zacks Rank #5 (Strong Sell) rating we currently have on the stock.

Shares of Conn’s have struggled since hitting a fresh 52-week high in July near $44. A fierce selloff saw shares slide all the way below $20 by late October. What some may call a dead cat bounce had shares recover to $28 but in the weeks since, CONN has dipped below $25 again.