• Clint Engel

Aaron's earnings jump 19% in fourth quarter

Rent-to-own giant will continue to open stores
ATLANTA — Rent-to-own giant Aaron's reported a 19% jump in fourth-quarter earnings from continuing operations and a 10% increase in revenues as the company continued to shine in a weak home furnishings environment.

Aaron's also said it will continue its aggressive expansion, aiming to open a net 84 to 152 stores this year.

Earnings from continuing operations amounted to $25 million or 46 cents per share in the quarter, on revenues of $446.3.

For the year, revenues were up 10% from a year ago to $1.75 billion and earnings from continuing operations increased 32% to $112.9 million.

In the fourth quarter of 2008, Aaron's sold its Aaron's Corporate Furnishings division and no longer includes the revenues and expenses in its continuing operations. Including the discontinued division, 2009 earnings were $112.6 million, up from $90.2 million in 2008.

"This was another outstanding quarter for us," said Robert Loudermilk, president and CEO of the Atlanta-based chain with a network of company-owned and franchised stores. "We continue to grow ... and our view of the future remains optimistic. Our customer base needs basic home furnishings, and no matter what the economic environment we have proven that we are well positioned to fulfill these needs."

Same-store revenues at company-owned stores in the fourth quarter were up 5.2% from the same period a year ago.

Aaron's said it had 829,000 customers and its franchisees had 451,000 customers at the end of the year, a 16% increase in total customers from a year earlier.

Revenues at its Aaron's Sales & Lease Ownership division were up 11% in the fourth quarter to $441.7 million, and 11% for the year to $1.7 billion.

Revenues at the company's Aaron's Office Furniture stores fell 27% to $4.1 million in the quarter and declined 25% to $16.5 million for the year. That division had pretax losses of $1.3 million for the quarter and $7.8 million for the year, compared with 2008 pretax losses of $695,000 in the quarter and $2.2 million for the year.

Aaron's said its franchisees collectively saw revenue increases of 14% in both the fourth quarter and the year, to $196.5 and $759 million respectively. Same-store revenues for franchised stores were up 8.9% for the quarter.

Also during the fourth quarter, Aaron's Sales & Lease Ownership division opened 25 new company-operated stores and 21 franchised stores. It acquired one franchised store and sold 10 company-owned stores to a franchisee. It closed four company-operated stores and two franchised stores along with two company-operated Rimco stores. One Aarons Office Furniture store was opened.

For the year, Aaron's opened 85 company-owned and 84 franchised stores for an 8.8% net gain in store count to 1,694 stores, including 1,071 company-owned and 590 franchised Sales & Lease Ownership stores.

Aaron's updated its guidance to the investment community saying it expects first quarter revenues of about $485 million and earnings per share of 62 cents to 67 cents.

Full-year revenues are expected to reach $1.85 billion with earnings per share in the $2.15 to $2.35 range. The company said it expects to increase its net store count by 5% to 9% (company-owned and franchised), which would give it a total store count by the end of the year of 1,778 to 1,846 units.

Clint EngelClint Engel | Senior Retail Editor, Furniture Today

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