Rent-A-Center revenues rise 1.5% but 4Q profits tumble
Larry Thomas -- Furniture Today, January 28, 2014
PLANO, Texas — Rent-A-Center, the nation's biggest rent-to-own operator, said fourth-quarter revenues edged up 1.5%, but profits tumbled because of higher operating expenses and weak business at its company-owned U.S. stores.
The company said revenue increases from its international stores and its Acceptance Now kiosk business barely offset a 5.5% revenue decrease in its U.S. rent-to-own stores.
As a result, profits fell to $13.1 million or 25 cents per share, from $47.2 million or 80 cents per share in the fourth quarter of 2012.
Fourth-quarter revenues totaled $769.6 million, up from $758.4 million in the previous year's fourth quarter.
"We continue to face meaningful headwinds in our domestic U.S. rent-to-own business, including a customer under severe economic pressure and an intensified promotional environment," said Mark Speese, chairman and CEO. "These conditions significantly impacted our core U.S. segment customer agreement growth in December, which was the most challenging in years."
He said those same conditions also affected the Acceptance Now business, which places rent-to-own kiosks in traditional furniture stores and other retailers that don't have a rent-to-own business. Revenues for that segment grew 41%, but Speese said it was below the company's targets.
The story for the 2013 calendar year was much the same as the fourth quarter.
Company-wide revenues edged up 0.7% to $3.1 billion, but that included a 6.4% decline in revenues from U.S. stores.
Profits for the year fell to $128.2 million or $2.32 per share. In 2012, the figures were $181.7 million or $3.06 per share.
"Obviously, we are deeply disappointed in the conclusion of 2013 and recognize the challenges we face to improve the results of our core U.S. segment in 2014 and beyond," said Speese. "We continue to believe strongly in the longterm potential of our growth initiatives and in our ability to improve execution in the core business."
Rent-A-Center is projecting revenue growth of 4.5% to 7.5% in 2014. Earnings are projected at $2.30 to $2.50 per share.
As of Dec. 31, the company had 2,992 company-owned and 179 franchised stores in the U.S. There were also 1,325 Acceptance Now kiosks and 169 international stores.
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