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Aaron's posts 23% increase in 4Q net earnings

Furniture Today Staff -- Furniture Today, February 24, 2011

ATLANTA — Rent-to-own giant Aaron's posted a 23% jump in fourth quarter net earnings to $30.8 million, or 38 cents per share, and a 9% increase in revenues, beating its guidance despite a continuing sluggish economy.

Profit for the period ended Dec. 31 was up from $25 million, or 31 cents per share, for the same period a year ago, while revenues increased to $484.4 million in the quarter from $446.3 million the year before.

For the full year the company, which owns and franchises Aaron's Sales & Lease Ownership and other stores, reported a 5% increase in net earnings to $118.4 million from $112.6 million a year ago, and a 7% increase in revenues to $1.88 billion.

Same-store revenues for company- owned stores increased 6.2% during the fourth quarter of 2010, compared to the fourth quarter of 2009. The company had 912,000 customers, and its franchisees had 502,000 customers at the end of the year, for a 10% increase over the year before.

"Although current business challenges and conditions affect us as they do other retailers, through the years the strength of the Aaron's business model has been proven resilient and has delivered consistent and superior financial results," Aaron's President and CEO Robert Loudermilk said in a release.

"Aaron's provides desired and needed basic home furnishings, and our customers' demand for these products continues to remain strong."

During the fourth quarter, the company's main Aaron's Sales & Lease Ownership division opened 31 company-owned and 25 franchised stores. It also acquired the accounts of two independent operators and sold three company-operated stores to two franchisees. Six company-operated stores and one franchised Sales & Lease Ownership store were closed, along with one company-owned RIMCO store and one Aaron's Office Furniture store.

For the year, Aaron's opened 91 company stores and 72 franchised stores for a net store count increase of 8%. It finished the year with 1,138 company-owned Aaron's Sales & Lease Ownership stores, 658 franchised Sales & Lease Ownership stores, 11 company-operated RIMCO stores, and six franchised RIMCO stores. It also had one Aaron's Office Furniture store, part of division that Aaron's is in the process of shutting down.

Aaron's said it expects first-quarter revenues for companyo-wned stores of about $530 million and first-quarter earnings per share in the range of 48-52 cents per share, "assuming no significant store or asset sales."

For this year, it expects revenues from company-owned stores of about $2 billion and earnings per share in the $1.61 to $1.77 range.

In addition, Aaron's said its store base should grow about 5% to 9% this year, which equates to a net increase of 90 to 163 stores.

Aaron's Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 12/31	2010	2009	Change
Revenues	$484,429,000	$446,268,000	8.6%
Operating income	50,491,000	40,703,000	24.0%
Net income	30,787,000	25,064,000	23.0%
Earnings per share	0.38	0.31	22.6%
Year ended 12/31	2010	2009	Change
Revenues	$1,876,847,000	$1,752,787,000	7.1%
Operating income	193,882,000	180,738,000	7.3%
Net income	118,376,000	112,601,000	5.1%
Earnings per share	1.44	1.37	5.1%

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