Aaron's revenues dip for Q4, show slight increase for fiscal year
February 17, 2017,
ATLANTA— Rent-to-own giant Aaron’s posted declines in its fourth quarter revenues and earnings as weakness in its store business continued to play against the strength of its Progressive leasing division.
Combined revenues for the company’s Aaron’s, Progressive and Dent-A-Med businesses decreased 3.2% to $795 million for the period ended Dec. 31, from $821.2 million for the fourth quarter of 2015.
Revenues at its core Aaron’s store business decreased 14.5% to $463.5 million and same-stores revenues at company operated stores decreased 5.8%. Excluding revenues from its HomeSmart business, which was sold in May 2016, fourth quarter revenues for the division decreased 12% for the quarter.
Aaron’s Progressive revenues, meanwhile, grew dramatically, up 17.3% in the quarter to $324 million.
For the full year, Aaron's revenues increased slightly to $3.2 billion from $3.18 billion. Net earnings increased to $139.3 million, or $1.91 per share, from $135.7 million, or $1.86 per share
In a release, CEO John Robinson characterized 2016 as “another strong year for the company,” adding, “The results reflect disciplined execution across an omnichannel platform that spans retail stores, e-commerce and virtual lease-to-own.”
Robinson said Aaron’s took aggressive action to strengthen its management team, reduce costs, and increase its focus on execution in both its stores and on Aarons.com.
The company, which had noted plans to review its store base and “right size its footprint,” closed 61 stores in the fourth quarter and said it has identified 70 additional stores that will close in the second quarter of this year. The latter move resulted in a fourth quarter pre-tax charge of about $2 million. An additional pre-tax charge of about $13 million related to the move is coming in the second quarter.
On a non-GAAP basis, net earnings for the fourth quarter of 2016 were $36.3 million, or 50 cents per share, compared with $29.8 million, or 41 cents per share, for the same quarter in 2015. The adjusted results exclude the effects of expenses such amortization resulting from Aaron’s 2014 acquisition of Progressive and transaction costs associated with its 2015 acquisition of Dent-A-Med.
While the results beat analysts' expectations, Aaron's stock was down more than 8% in early trading to about $$27 per share.
At year end, the company has 1,165 company-owned stores and 699 franchised units.