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Conn's stock tumbles after earnings estimates are reduced

Retailer says sales rose 45% in fourth quarter

THE WOODLANDS, Texas — Conn's Inc. said sales rose approximately 45% in the fourth quarter, but the retailer's stock was hammered this morning on the New York Stock Exchange because the company also said earnings would fall short of its December projections.

The earnings shortfall is due to higher-than-expected charge-offs and delinquency rates in its credit segment during December and January, the retailer said in a preliminary financial report issued early Thursday.

Earnings for the fiscal year that ended Jan. 31 are now estimated at $2.59 to $2.64 per share. That's down from a December projection of $2.75 to $2.80 per share.

The company also said earnings for the fiscal year ending Jan. 31, 2015 would be $3.40 to $3.70 per share. That was down from the previous projection of $3.80 to $4 per share.

The news sent Conn's stock into free-fall in early trading. Shares were down nearly 35% and were trading well under $40 per share at mid-morning. The stock closed at $55.80 per share on Wednesday.

The preliminary report didn't estimate sales for the fiscal year, but said sales for the quarter ended Jan. 31 were approximately $301.6 million, a 44.8% increase over the same quarter the previous year.

Furniture and bedding sales totaled $72.3 million, or about 24% of the total.

The retailer said furniture sales were up 29% and the average unit selling price rose 19%. Mattress unit volume rose 70% and the average unit selling price was up 12%, the company said.

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