Conn’s Inc. is shuttering 71 locations across 13 states, the retailer said on its website.
Cash Crunch Sees Home Retailer Conn's Shutting Down Operations
The locations slated to be shuttered operate under the Conn’s HomePlus banner. The discount home retailer also owns the W.S. Badcock nameplate, a furniture retailer that it acquired last year. The two nameplates combined gave Conn’s just over 550 locations in operation as of this past April, with about 172 company-owned stores. Conn’s operates a franchise model, leaving the balance of roughly nearly 380 locations dealer-owned. Bloomberg reported last week that store closures could total 100, with 30 doors to close under the Badcock banner. It also said earlier this month that Conn’s is contemplating a Chapter 11 filing for bankruptcy court protection.
A Conn’s Inc. spokesman did not respond to a request for comment.
The home sector has been particularly hard hit, and has carried the highest default risk across retail since 2021, according to data from S&P Global Market Intelligence. In 2023, home was the year’s biggest loser, leading the list of retail bankruptcies in a year that also saw the mega filings of Bed, Bath & Beyond and the second Chapter 11 filing—the so-called Chapter 22 —of Tuesday Morning.
That the home sector should turn into one of the most distressed among retail categories shouldn’t be a surprise. Home furnishings boomed during the COVID pandemic as people sheltered in place, with many needing to upgrade their home offices as they began to work from home. That shifted when people began to head back to their offices, even on a part-time basis, as they began to focus on updating their work wardrobes instead.
The supply chain also had a big impact on the margins of home retailers, and not in a good way. Rising supply chain costs hurt purveyors moving big pieces of furniture, both in imports and in shipments to customers. Retailers such as Conn’s weren’t immune to those supply chain challenges. But the retailer was also hard hit as inflationary pressures began climbing, hitting the discretionary purchasing power of lower-income consumers—Conn’s targeted market—particularly hard.
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Conn’s has been struggling financially for a few years. The company in April posted a wider net loss for the year ended Jan. 31, 2023, to $76.9 million, or $3.17 a diluted share, from a net loss of $59.3 million, or $2.46, in 2022. The adjusted loss for the year was $6.22 a diluted share. Total revenues in 2023 fell 7.8 percent to $1.24 billion from $1.34 billion in the prior year, which included a 9.1 percent decline in net sales to $978.3 million from $1.08 billion a year ago.
Conn’s in December 2023 disclosed what it called a “transformative transaction” to acquire Bradcock in an all-stock deal to create a combined entity that it said would have $1.85 billion in annual revenue, including e-commerce sales at a projected $125 million. When the company posted full-year results, Conn’s president and CEO Norm Miller said in a statement that “we expect the macro-environment to remain challenging throughout our fiscal year 2025.”
Conn’s on June 26 disclosed that it received a delinquency notice from Nasdaq noting that it was not in compliance with a listing rule on the exchange because of its delay in filing its quarterly report for the period ended April 30, 2024. The retailer has until Aug. 19, 2024 to file its quarterly report. So far, the delay has no impact on the trading of its shares, which are currently in the 51 cents range. The 52-week high for the shares is $5.26, with the low at 47 cents.
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