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Value Line has initiated coverage of Conn’s, Inc. (CONN) in its flagship product, The Value Line Investment Survey. The Beaumont, Texas-based retailor specializes in the sale of durable consumer goods ranging from refrigerators to digital cameras to mattresses and more.

Founded in 1890, Conn’s was originally known as Eastham Plumbing and Heating, which made its money through the sale of relevant trade supplies. After several changes of hands and finally, the purchase of the company by an employee, Carol Washington Conn, as well as its subsequent, if not obvious, renaming, the retailer’s evolution into what it is today truly began. The following decades saw the company expand, first locally then nationally, and add numerous new products to offer to its loyal consumer base. Eventually, under the tutelage of C.W. Conn’s son, the company vertically integrated, adding a maintenance subsidiary and a credit financing service to support the sales of its big-ticket inventory.

The company’s wide array of product offerings, which currently total more than 2,100, gave it a healthy position in four major retail categories: consumer electronics, home appliances, furniture and furnishings, and home office goods. For generations, it has promoted its consumer-centric values, invoking the late Mr. Conn’s mantra, “the Customer is Number One.”

The company’s recent history is characterized by a focused and deliberate expansion of operations into major markets, in and out of state. After a strategic partnership with the Stephens Group in 1998, Conn opened a new location for four years straight to stellar and continually improving results. In 2003, the company became publicly traded, hitting a historic trading high price of roughly $45 within two years.

While Conn’s, like many in the retail category, experienced difficulty during the 2007-2009 recession, it has the potential for a significant recovery within the next several years. For one, discretionary spending appears to be in a moderate upswing, which augurs well for the Texas-based retailer. Also, in September, the company completed an extension of its loan facility with a syndicate of local banks.

Today, the retailer has stores serving all the major metropolitan regions of Texas (57 of 65 stores are located in the Lone Star State), as well as markets in Louisiana, Oklahoma, and New Mexico. With a steadily growing cash flow and favorable credit environment, Conn’s management has been somewhat forward about the aspirations to enter into new markets, should the opportunity arise. Such a move would undoubtedly support extended top-line growth for the next several years.

All told, the company’s near- and long-term prospects look encouraging, as its emergence from post-recession difficulties left Conn shares with plenty of recovery potential. Same-store sales continue to improve, as do margins, with no immediate signs of slowing down.

Subscribers interested in this specialty retailer are advised to consult Value Line’s quarterly reports for Conn’s, Inc., as well as any supplemental reports and relevant articles as important news items arise.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.