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Rent-A-Center earnings slip 8.5% in quarter

Revenues down less than 1%

Clint Engel -- Furniture Today, July 28, 2008

PLANO, Texas — Rent-A-Center reported second-quarter net earnings of $37.7 million, down 8.5% from the same period last year.

Total revenues for the giant rent-to-own operator dipped less than 1% to $719 million for the quarter ended June 30. The decrease resulted mainly because the company has closed 325 stores in the past year as part of a restructuring plan, and was offset by a 0.9% increase in same-store sales, the company said.

“Our operating team executed well in the second quarter in spite of the difficult economic conditions,” said Rent-A-Center Chairman and CEO Mark Speese. “We exceeded our guidance for same-store sales and were within our guidance for store rental and fee revenue and diluted earnings per share.”

For the first sixth months, total revenues were virtually flat at $1.48 billion as same-store sales grew 2.2%. Net earning were up 31.5% to $74.1 million.

Earnings were reduced in the first half of this year by a $2.9 million pretax restructuring expense, while earnings for the first half of 2007 were hit by a $51.1 million pretax litigation charge.

Speese said the company continues to be cautiously optimistic about the near term.

“We believe that we are well positioned with our marketing and advertising plans in place and should also benefit from customers attracted to our transaction due to the difficult credit environment,” he said.

Rent-A-Center, with about 3,054 stores in the United States, Canada and Puerto Rico, opened one new store in the second quarter, acquired one store and the accounts from 10 additional locations, consolidated nine stores into existing locations and sold six stores, for a net reduction of 13 stores. It was offering financial services at 304 stores at the end of the quarter.

Through the first six months, the company repurchased 150,000 shares of its common stock for $3.1 million.

For the third quarter, the company said it expects revenues of $700 million to $715 million and same-store sales growth in the 3% to 4% range. It expects to open about five stores.

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