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Aaron revenues up 12.7%, but costs hold down profits

By Larry Thomas -- Furniture Today, April 27, 2008

Atlanta — Rent-to-own powerhouse Aaron Rents said first-quarter revenues rose 12.7%, but profits fell more than 15% as the company was beset by heavy start-up costs from several new stores opened late last year.

The company, which operates about 1,565 company-owned and franchised stores, said it was sticking to a previously announced plan to slow expansion efforts in 2008 and improve profitability.

For the quarter ended March 31, revenues of $437.3 million were up from $387.9 million in last year's first quarter.

Revenues from its largest business unit, the Aaron's Sales and Lease Ownership division, rose 16% to $406.3 million, while same-store rental revenues increased 2.6% for company-owned stores.

Net income for the quarter fell 15.2% to $24.7 million or 46 cents per share. In last year's first quarter, the figures were $29.2 million or 54 cents per share.

"As previously announced, we have slowed down our new store expansion plan in 2008 to concentrate on achieving better execution and improving overall profitability," said Charles Loudermilk, chairman and CEO. "We believe the earnings results are evidence that we have started to see some positive results from this plan."

He said fewer than 75 company-owned and 70 to 90 franchised stores are scheduled to open in 2008.

During the first quarter, 14 company-owned and three franchised stores were opened, while 20 company and three franchised locations were closed.

Aaron Rents
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 3/31	2008	2007	Change
(a) Includes pretax franchise royalties and fees of $11 million in the 2008 quarter and $9.9 million in the 2007 quarter. (b) Based on average shares outstanding of 54.2 million in the 2008 quarter, 55 million in the 2007 quarter.
Revenues (a)	$437,331,000	$387,934,000	12.7%
Operating income	42,814,000	48,769,000	(12.2%)
Net income	24,753,000	29,207,000	(15.2%)
Earnings per share (b)	0.46	0.53	(13.2%)

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Aaron revenues up, but costs hold down profits

Apr 23, 2008

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