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Rent-A-Center reports $36 million 4Q profit

By Larry Thomas -- Furniture Today, February 9, 2009

PLANO, Texas — Rent-A-Center said its fourth-quarter sales slipped 2.4%, but the nation's largest rent-to-own chain reported a profit of more than $36 million.

The company said a portion of the profit, roughly $8.9 million, was due to a pair of one-time gains. However, executives said they were generally pleased with the results, which included flat same-store sales during a period that saw many retailers reporting double-digit declines.

“Our operations performed well in a challenging environment, gaining customers in the quarter primarily with our Super Value products and also maintaining control of our collections,” said Mark Speese, chairman and CEO.

Rent-A-Center ended 2008 with 3,037 company-owned stores, about 315 fewer than it had at the end of 2007.

“Our management team remains focused on enhancing the overall customer experience in our stores, improving operational efficiencies, and maintaining expense control while generating positive cash flow from operations and maintaining a solid balance sheet,” said Speese.

Sales for the quarter ended Dec. 31 totaled $699.8 million, down from $717 million in the fourth quarter of 2007.

The quarterly profit of $36.1 million or 54 cents per share compares with a net loss of $5.4 million or 8 cents per share in the fourth quarter of 2007. The 2007 quarter included a one-time restructuring charge of $38.7 million or 39 cents per share.

For the full year 2008, sales totaled $2.88 billion, down slightly from $2.91 billion on 2007.

Last year's profit of $139.6 million or $2.08 per share was up sharply from $76.3 million or $1.10 per share in 2007. The 2007 figures included a one-time restructuring charge of $38.7 million and a one-time charge of $51.3 million to settle a class-action lawsuit in New Jersey.

Speese said he expects same-store sales to be flat to down 2% in the first quarter.

Rent-A-Center
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 12/31	2008	2007	Change
(a) Includes franchise revenue of $7.9 million in the 2008 quarter, $10 million in the 2007 quarter, $33.3 million in the 2008 year and $34.2 million in the 2007 year. Also includes royalty income and fees of $1.2 million in the 2008 quarter, $1 million in the 2007 quarter, $4.9 million in the 2008 year and $8.8 million in the 2007 year. (b) Includes pretax restructuring expenses of $1.4 million in the 2008 quarter, $4.5 million in the 2008 year and $38.7 million in the 2007 quarter and year. Includes a $4.6 million pretax litigation credit in the 2008 quarter and year, and pretax litigation expenses of $11 million in the 2007 quarter and $62.3 million in the 2007 year. Also includes a pretax gain on the extinguishment of debt of $4.3 million in the 2008 quarter and year. (c)Based on average shares outstanding of 66.8 million in the 2008 quarter, 67.2 million in the 2007 quarter, 67.2 million in the 2008 year and 69.5 in the 2007 year.
Revenues (a)	$699,750,000	$716,963,000	(2.4%)
Operating income	65,157,000	64,005,000	1.8%
Net income(b)	36,146,000	(5,361,000)	—
Earnings per share (c)	0.54	(0.08)	—
Year ended 12/31	2008	2007	Change
Revenues (a)	$2,884,172,000	$2,906,121,000	(0.8%)
Operating income	290,915,000	320,934,000	(9.4%)
Net income (b)	139,624,000	76,268,000	83.1%
Earnings per share (c)	2.08	1.10	89.1%

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Rent-A-Center reports $36 million fourth-quarter profit

Feb 3, 2009

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