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Aaron earnings nearly double as revenues rise 14%

Hurricanes hurt last year’s results

Clint Engel -- Furniture Today, October 26, 2006

ATLANTA — Aaron Rents’ third-quarter profit jumped 97%, helped in part by hurricane-slammed results last year.

The nation’s second largest rent-to-own operator posted net earnings of $17.4 million for the quarter ended Sept. 30, up from $8.8 million in the same period in 2005. Earning per share grew to 32 cents from 17 cents.

Revenues grew 14% to $317.7 million. Same-store revenues grew 6.9% at company-owned stores and 12.7% for franchise stores.

Aaron’s ended the period with 1,202 company-owned and franchised Aaron’s Sales & Lease Ownership stores, 59 rent-to-rent corporate furnishings stores and 12 Rimco tire rim specialty stores.

For the first nine months, Aaron’s net earnings grew 37% to $59.6 million while revenues increased 19% to $986.7 million.

Both the quarter and nine-months results compared to periods last year that were hurt by loss of goods, store damage and other costs resulting from hurricanes Katrina and Rita, the company said.

For the fourth quarter, Aaron’s projects revenues of more than $335 million and earnings of 32 to 36 cents per share, compared with $296.2 million in revenues and 29 cents per share in the fourth quarter of 2005.

In a conference call with analysts, Chairman and CEO Charlie Loudermilk said Aaron’s should benefit from several factors outside the company’s control — falling gas prices, Wal-Mart’s recent elimination of its layaway program, and competitor Rent-A-Center’s planned acquisition of Rent-Way, which should drive some business to Aaron’s stores as Rent-A-Center tries to convert Rent-Way’s customer base.

“Our rapid store expansion continues as planned and we are on track to add approximately 350 stores, a combination of company-operated and franchised stores, over the 18-month period ending on Dec. 31, 2007,” Loudermilk said in a statement.

In the first three quarters of this year, Aaron’s opened 38 company-owned and 42 franchised Sales & Lease Ownership stores. It also opened four Rimco stores, and acquired 22 franchises from existing dealers and seven independent RTO stores. It expects to add 70 more stores in the fourth quarter to end the year with about 1,350 units.

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Aaron Rents profits jump 96.6%

Nov 12, 2006

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