Rent-A-Center profits rise 10.8% as revenue climbs 7.4%
Larry Thomas -- Furniture Today, July 24, 2012
PLANO, Texas — Aided by the strong performance of its RAC Acceptance segment, rent-to-own giant Rent-A-Center said second quarter profits increased 10.8% on a 7.4% jump in revenues.
The company said RAC Acceptance, which provides rent-to-own transactions through kiosks in traditional retail stores, accounted for the majority of the quarter's revenue growth. The segment also reversed an operating loss recorded in last year's second quarter.
Total revenues for the quarter ended June 30 were $749.7 million, up from $698.3 million in the same quarter in 2011.
Of that total from the most recent quarter, $654.4 million came from its core U.S. Rent-A-Center stores - an increase of 1.6% from last year's second quarter - while $77.1 million came from RAC Acceptance.
The RAC Acceptance revenues were 88.4% above the same quarter last year.
Net income for the quarter totaled $44.2 million or 74 cents per share, up from $39.9 million or 63 cents per share in the same period last year.
"We are generally pleased with our results in the quarter," said Mark Speese, chairman and CEO. "The RAC Acceptance segment performed exceptionally well, nearly doubling revenue from a year ago to $77 million, with a gross profit margin of 58% and an operating profit of $7 million."
He said the results enabled the company to maintain its revenue and earnings projections for 2012. Revenues are expected to be 7% to 10% above last year's $2.88 billion, while earnings per share are projected to be $3.00 to $3.20. In 2011, earnings were $2.66 per share.
Speese said revenues for RAC Acceptance should top $300 million this year.
For the first half of 2012, total revenues were $1.58 billion, up 10% from $1.44 billion in the first half of 2011.
First-half profits totaled $96.1 million or $1.61 per share. That's up 14.3% from $84.1 million or $1.32 per share in the first half of 2011.
As of June 30, the company had 4,102 locations, including 2,973 Rent-A-Center stores in the U.S. and 811 RAC Acceptance locations. Also in the total are 99 Rent-A-Center stores in Canada and Mexico and 291 franchised ColorTyme stores.