Rent-A-Center revenues flat in 4Q and year, earnings fall
Revenue in 4Q down 0.4%
By Furniture Today Staff -- Furniture Today, February 7, 2006
PLANO, Texas — Rent-to-own retailer Rent-A-Center reported nearly flat revenues for the fourth quarter and year, with earnings declining in both periods because of weaker same-store sales and higher operating costs.
Fourth-quarter revenue of $583.2 million was down 0.4% from the same period a year earlier, and earnings of $35.1 million were 25.2% below the year-earlier level.
For the year, revenues of $2.3 billion were up 1.4% from 2004. Earnings fell by 12.9% to $135.7 million.
The company said same-store sales fell by 0.2% in the fourth quarter and 2.3% in the year. Also affecting revenue was the closing and merging of 114 stores with existing Rent-A-Center stores and the sale of 35 units as part of a previously announced consolidation plan.
“Our 2005 earnings were negatively affected by the weakness in our same-store sales, which we believe reflects, among other things, higher fuel and energy costs that ultimately suppressed customer demand, and also believe that product evolution, particularly in low-end consumer electronics, placed additional pressure on our business,” said Chairman and CEO Mark Speese.
He said the trend of same-store sales comparisons was improving in the fourth quarter, and that earnings per share exceeded expectations in the period.
“In addition, we continue to generate significant cash flow from operations that we intend to utilize to enhance stockholder value by, among other things, adding approximately 5% to our rent-to-own store base, opening financial services centers in existing rent-to-own stores and repurchasing our outstanding common shares,” Speese said.
Excluding the effects of one-time expenses and credits, including the restructuring, hurricane effects, a state tax reserve credit and litigation costs, the company said fourth-quarter earnings were $35.1 million, or 50 cents per share, down 18% from 61 cents per share a year earlier.
On that same basis, earnings for the year came to $141.9 million, or $1.91 per share, compared with $182.7 million or $2.28 per share in 2004.
Speese said he is “cautiously optimistic” about this year, although fuel and energy costs remain a concern.
In 2006, Rent-A-Center expects to open 60 to 80 stores and expects same-store revenue to be flat to slightly positive. It plans to add financial services to between 100 and 160 stores. Earnings are forecast to range from $2 to $2.10 per share.
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