Aaron's earnings down 38.1% as revenues dip 2% in 4Q
February 7, 2014-- Furniture Today,
ATLANTA — Rent-to-own merchant Aaron's revenues dipped 2% in the fourth quarter and earnings fell 38.1%, the company reported today.
Ronald Allen, chairman, president and CEO of the Atlanta-based company, said the quarter "did not meet expectations. 2013 has been a year of challenges and change for Aaron's and growing revenues and adding customers has been difficult with ongoing economic pressures on low to middle income consumers."
Revenue was $553.9 million in the fourth quarter, down from $565.4 million in the comparable period a year earlier. Earnings of $22.7 million or 30 cents per share were down from $36.6 million or 48 cents per share.
For the year, revenue of $2.2 billion was up 1% from 2012. Net earnings of $120.7 million or $1.58 per share were down 30.3% from $173 million or $2.25 per share the previous year.
Same-store revenues were down 0.9% in the fourth quarter and customer count was down 1.4%, the company reported.
The 2013 earnings were reduced by $28.4 million the company accrued related to a pending regulatory investigation by the California attorney general into Aaron's leasing, marketing and privacy practices, the company said. There was also a $4.9 million charge related to retirement and vacation expenses. In 2012, the company took a $10.4 million charge related to retirement expenses, and recognized $35.5 million in income related to a lawsuit settlement.
Excluding those charges and gains, net income in 2013 would have been $142.4 million or $1.86 per share last year, and $157.4 million or $2.04 per share in 2012, Aaron's said.
Allen said the company will have to work to generate growth.
"Our customer count grew only slightly in 2013 and due to the nature of the sales and lease ownership business it will take several quarters of increasing our customer base to significantly grow revenues and earnings," he said. "We have spent substantial effort during the year strengthening our management team and operating practices and procedures, and believe the corporate infrastructure is now in place to produce solid and sustainable future financial performance. With better focus and execution our core business should return to more normal trends. We remain optimistic and look forward to better performance in 2014."
For this year, the company is projecting first-quarter revenue of about $600 million and earnings per share in the range of 57 to 62 cents. For the year, it projects corporate revenues of $2.3 billion and EPS of $1.80 to $2.