SAN DIEGO and THE WOODLANDS, Texas, March 10, 2014 /PRNewswire/ -- Shareholder rights law firm Robbins Arroyo LLP announces that an investor of Conn's, Inc. (NASDAQ: CONN) has filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of Texas. The complaint alleges that the company and certain of its officers and directors violated the Securities and Exchange Act of 1934 between April 3, 2013 and February 19, 2014 (the "Class Period"). Conn's is a retailer of durable consumer products, including appliances, furniture, and mattresses in the United States.
Conn's Is Accused of Misleading Investors About Company's Susceptibility to Bad Debt
According to the complaint, shares of Conn's fell $23.91 per share, or over 42%, to close at $31.89 on February 20, 2014. The fall in Conn's share price came in reaction to a press release announcing the company's diluted earnings per share for its fiscal 2014 fourth quarter was below the company's previously issued full-year fiscal 2014 guidance, and that its 2015 fiscal guidance would be lowered. The complaint alleges that the earnings decline resulted from higher than anticipated account receivable charge-offs and delinquency rates during the quarter, requiring Conn's to take increased provisions for bad debt. Specifically, Conn's loan portfolio delinquency rate for customers 60-days delinquent increased 30 basis points during its fiscal 2014 fourth quarter to 8.8% at January 31, 2014.
The complaint further alleges that Conn's concealed from investors that the company's growth was based on underwriting and business practices that weakened portfolio quality and threatening the company's financial performance. As a result, Conn's statements regarding financial performance and expected earnings in 2014 and 2015 were materially false and misleading throughout the Class Period.
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