Aaron Rents expects 4Q profits to dip
By Furniture Today Staff -- Furniture Today, January 27, 2008
Atlanta — Aaron Rents expects to report fourth-quarter earnings per share of 27 cents to 28 cents when it releases results Feb. 19, the rent-to-own and rental retailer announced.
That compares with 35 cents per share for the same period a year ago.
Aaron's said same-stores sales increased in the quarter, but profitability dipped as a result of expansion costs.
Aaron's main Sales & Lease Ownership division of RTO stores saw revenues jump 16% while overall company revenues increased 14% compared with the fourth quarter a year ago. Same-store sales for the Sales & Lease Ownership division were up 3.9%.
The company added a net 61 company-owned stores and 38 franchised units during the quarter for a total of 1,560 stores at year's end. New store start-up expenses were about 11 cents per share compared with 4 cents per share a year ago.
Aaron Chairman and CEO Charlie Loudermilk Sr. said last year was a record for the company in revenues and earnings and a year of rapid expansion in stores.
"Although conditions in some of the markets are currently challenging, we are confident that the products and service we offer to credit-constrained consumers will continue to be in high demand in the future," he said.
Loudermilk said revenue growth for the company-owned stores was less than expected, although Aaron made progress in reducing write-offs.
"The expenses incurred in expanding our store base substantially reduced profitability compared to the fourth quarter a year ago," he said. He added that the company has slowed down its growth plans for this year "and will concentrate on improving overall profitability as well as revenue growth in existing stores."
For all of 2007, Aaron's revenues (excluding revenues of franchisees) were up 13% to just below $1.5 billion, the company said.
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