CONN’S, Inc. (NASDAQ:CONN), a specialty retailer of durable consumer goods, said it will explore a full range of strategic alternatives including a sale of the company to enhance its shareholder value.
The retailer’s CEO emphasized, however, that the company has ample capital and liquidity to execute its business plan.
Explore strategic alternatives
The electronics and home appliance retailer CONN’S, Inc. (NASDAQ:CONN) said its board authorized its management to explore a full range of strategic alternatives including, but not limited to, a sale of the company, separating its retail and credit businesses or slowing store openings and returning capital to investors.
Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More
The specialty retailer of consumer durable goods engaged BofA Merrill Lynch as a financial advisor and Vinson & Elkins LLP as legal counsel to assist in the process.
The specialty retailer’s chairman and chief executive officer Theodore M. Wright said: “Our strategic initiatives remain on track with new store openings and the penetration of new geographic markets, and we remain committed to our current strategic plan”.
The company said thanks to management’s execution of its strategies, its operating performance has improved significantly over the past four fiscal years with average store-level revenue per location up 46%, while operating income increased over 390%.
Steep drop in CONN’s stock price
As reported earlier, the specialty retailer of consumer durable goods reported relatively weak financial second-quarter results. Mirroring the poor performance, its share price dropped almost 31% to $31 per share. Analysts at Canaccord Genuity lowered their price target for the shares of CONN’S, Inc. (NASDAQ:CONN) from $71 to $40 per share.
However, the retailer’s stock price increased 6.5% last week after Luxor Capital Group revealed its acquisition of approximately 1.1 million shares in its filings with the Securities and Exchange Commission.
David Einhorn’s Greenlight Capital owns 3.5 million shares of Conn based on its second-quarter 13F filing with the SEC, making Einhorn one of the largest shareholders.
The specialty retailer also unveiled a stockholder rights plan today and declared a dividend of one right for each outstanding share of the company’s common stock. The rights plan will expire on October 5, 2015 and is aimed to facilitate management and the board in exploring various strategic alternatives.