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Rent-A-Center second-quarter earnings rise 14%

Revenues down slightly after business divestiture

Jay McIntosh -- Furniture Today, July 27, 2010

PLANO, Texas — Rent-A-Center's net earnings rose 14% in the second quarter despite a 1.2% decline in revenues, the result of the divestiture of a business last year, the company reported.

The largest U.S. rent-to-own merchant said its same-store revenues were up 0.1% from the second quarter last year.

Total revenues for this year's second quarter amounted to $671.5 million, down about $8.1 million from a year earlier. Last year's period included $14 million from a prepaid telecommunications and energy business, dPi Teleconnect, that Rent-A-Center divested in November.

Earnings per share were 72 cents in the latest quarter, up from 63 cents a year ago. Last year's earnings included a 2 cent gain from a litigation credit.

"We are pleased with our results in the second quarter, having exceeded our earnings guidance by improving the margins on our inventory and continuing our expense management initiatives," said Mark Speece, Rent-A-Center chairman and CEO.

"We remain focused on attracting a variety of customers with our strong product values, while continuing to improve margins and are cautiously optimistic regarding the balance of the year. This gives us the confidence to increase the lower end of our 2010 earnings guidance from $2.60 to $2.65 and maintain the upper end at $2.80," he said.

For the six months ended June 30, revenues of $1.39 billion were down $18 million from the same period last year. The 2009 revenues included $28 million from the divested business.

Earnings of $99.3 million or $1.49 per share for the six months were up 13.7% from a year earlier. The 2009 results included litigation credits of 4 cents per share.

Rent-A-Center also said its board has initiated a quarterly cash dividend on its common stock. The first dividend of 6 cents per share will be paid Aug. 26 to shareholders of record on Aug. 12.

The board also boosted the authorization for its stock repurchase plan from $500 million to $600 million. This year, the company has bought back 268,365 shares for about $6.5 million.

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