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Rent-A-Center posts higher profit on flat revenues

First-quarter earnings more than double to $36.4 million

Larry Thomas -- Furniture Today, April 29, 2008

PLANO, Texas — Rent-A-Center, the largest U.S. rent-to-own chain, said first quarter revenues were essentially even with last year’s first quarter but profits more than doubled.

The company said same-store sales rose 2.8% due to a restructuring plan that has resulted in the closing of 315 stores during the past year.

“These positive results primarily benefited from higher merchandise sales and an earlier-than-expected benefit from our restructuring plan,” said Mark Speese, chairman and CEO. “While we are mindful of the challenging macroeconomic environment we will continue … to focus on those areas within our control, including the customer’s in-store experience, collections and managing our resources effectively.”

Revenues for the three months ended March 31 totaled $756.6 million, compared with $755.2 million in last year’s first quarter.

Net income was $36.4 million or 54 cents per share. That compares with $15.1 million or 21 cents per share in the first quarter of 2007.

The most recent quarter included restructuring charges of $2.9 million. Last year’s first quarter included a one-time charge of $51.3 million stemming from the settlement of a class-action lawsuit in New Jersey.

Rent-A-Center ended the quarter with 3,066 company owned stores — a net reduction of 15 during the quarter.

For the second quarter, which ends June 30, the company is projecting revenues of $701 million to $716 million on flat same-store sales.

Second quarter earnings are projected to be 53 cents to 59 cents per share. In the 2007 second quarter, earnings were 58 cents per share.

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