This article originally appeared on RealMoney.com on Sept. 2, 2014 at 11:11 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
Funny tweet this morning from Barbarian Capital:
"$CONN discovers Marketing 101: giving stuff away works. SSS up double digits, credit performance collapses."
And therein lies the issue with Conn's (CONN) , the Texas retailer famous for providing credit for the un-creditworthy.
While same-store sales rose, the company missed second-quarter earnings expectations and guided down, as it increased its provision for bad debts. As I noted in Columnist Conversation this morning, credit has always been the bearish story at Conn's.
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In retrospect, cracks in the company's credit story have been getting wider and wider, quarter after quarter.
As far back as a year ago, the company was blaming "short-term execution issues in our collections operations" for unexpectedly bad performance in its credit operations, which account for nearly a quarter of all revenue.
The situation worsened in February, with a twist: the company blamed the weather (and a bunch of other stuff) for its poor credit performance, which in turn led to an earnings warning.
As is the case today, the stock collapsed on that news, only to slowly recover as investors unwisely shrugged off credit concerns.