Aaron’s quarterly profit jumps 18%
Revenue grows 15%, to $411.2 million
Clint Engel -- Furniture Today, July 23, 2008
ATLANTA — Aaron Rents earned $23.3 million in the second quarter, up 18% from the same period last year as revenues improved.
Total revenues for the rent-to-own and rental specialist grew 15% to $411.2 million. Diluted earnings per share were up 19% to 43 cents from 36 cents a year ago.
For the first six months, revenues climbed 14% to $848.5 million and net earnings decreased 1.7% to $48 million, compared with the first half of 2007.
Aaron Rents Chairman Charlie Loudermilk called the second quarter results “exceptional.” He said the company continues to grow and is “pleased that we service the large market of credit-constrained consumers who need and desire our products and services even in these difficult economic times.”
President and CEO Robert Loudermilk Jr. said that in the second quarter, “we saw an improvement in same-store revenues, collection efforts and overall store level execution, and our profitability exceeded expectations.” The strong performance came even with new-store start-up expenses that reduced results by 6 cents per share, he said.
Second-quarter revenues for Aaron’s Sales & Lease Ownership division — its largest operation — increased 16% to $381.4 million. First-half revenues in the division also rose 16%, to $787.7 million.
In the second quarter, same-store revenues for company-operated stores in the division increased 4.1% from a year ago.
Franchisees had an 18% increase in second-quarter revenues to $160.3 million and same-store revenue increased 16.1%.
During the second quarter the Sales & Lease Ownership division opened six company-operated stores, 14 franchised stores, one company-operated Rimco store and one franchised Rimco store. It closed nine company-owned and four franchised stores, merging their operations with other existing stores.
Aaron also acquired 17 franchised stores; acquired one store and the rental accounts of six other unrelated rental companies; sold four company-owned stores to a franchisee; and sold the rental accounts of three other stores to another rental operator. It also closed two corporate furnishings stores during the quarter.
The company’s acquisitions and other transactions, “were done to improve profitability and we will continue to evaluate the need for additional mergers and realignments throughout the year,” said Robert Loudermilk.
As a result, the company said it expects to open about 55 to 65 new company-owned units and 55 to 65 franchised stores this year — less than previously forecast.
It expects third quarter revenues of more than $405 million and full-year revenues of about $1.7 billion (excluding revenues of franchisees). It raised its earnings-per-share guidance for the year to $1.54 to $1.64 from previous guidance of $1.40 to $1.55.
During the second quarter, Aaron awarded area development agreements to open 29 franchised stores. At the end of June there were a total of 285 franchised stores awarded and expected to open over the next several years.
Aaron’s Sales & Lease Ownership division has 993 company-operated stores, 480 franchised stores, 30 company-operated Rimco stores and seven franchised Rimco stores. Rimco rents automotive wheels and tires. In addition, the company operates 60 corporate furnishings stores.
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