Bestway posts 1Q loss; revenues increase 4.1%
By Furniture Today Staff -- Furniture Today, April 18, 2005
Dallas — Rent-to-own retailer Bestway said revenues grew 4.1% to $9.4 million in its first quarter ended Oct. 31, but the company posted a loss of $132,536 or 8 cents per share.
Bestway delayed the filing because it plans to go private, pending approval from the Securities and Exchange Commission and its stockholders. The company also told the SEC it would be late in filing its report for the quarter ended Jan. 31.
In the October quarter, the company said the net loss resulted from a plan to move to a more aggressive value-pricing model in an effort to increase customer traffic. Bestway also said it incurred an expense of $60,202 for the relocation of two stores.
In the comparable quarter a year earlier, the 69-store company reported a profit of $64,505 or 4 cents per share.
"I'm pleased to report strong internal enthusiasm for our new value-priced programs that have been well received by our customers, with early results exceeding expectations," said President and CEO David Kraemer. "While offering our customers an aggressive pricing model, we've been able to have a positive impact on reducing returns and collection efforts to focus on growing revenues and customers."
Transitioning to the model affected earnings with higher depreciation expense, he said, adding Bestway is committed to offering RTO customers "the lowest total cost of ownership." That will require strict cost controls, Kraemer said.
"While we continue to seek cost takeouts, it must be understood that short-term earnings may be erratic," he said.
| Bestway | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 10/31 | 2004 | 2003 | Change |
| (a) Includes non-rental revenues of $376,584 in the 2004 quarter and $330,839 in the 2003 quarter. (b) Revenues minus depreciation and amortization of rental merchandise, cost of merchandise sold, salaries and wages, advertising, occupancy and other operating expenses. (c) Includes a $60,202 pretax loss on the sale of property and equipment and a $79,867 income tax benefit. (d) Includes a $2,572 pretax gain on the sale of property and equipment. | |||
| Revenues (a) | $9,430,540 | $9,059,027 | 4.1% |
| Operating income (b) | 246,718 | 582,057 | (57.6%) |
| Net income | (c)(132,536) | (d)64,505 | — |
| Earnings per share | (0.08) | 0.04 | — |
