Aaron's Revenue up 8% for Quarter, Year

February 12, 2012  by in UnCategorized   

By Home Furnishings Business in Rent-To-Own on February 13, 2012

Rent-to-own furniture and appliance retailer Aaron's (NYSE: AAN) reported an 8 percent increase in fourth-quarter and 2012 revenue to $523.5 million and $2.02 billion, respectively.

Net earnings were down--off 1 percent in the fourth quarter to $30.5 million; and down 4 percent to $113.8 million for the year.

Same store revenues increased 3.7 percent during fourth-quarter 2011 compared with the fourth quarter of 2010. Same store revenues also increased 2.1 percent for company-operated stores open for over two years at the end of 2011.

During the fourth quarter, Aaron's recorded a $3.5 million, or $.03 per diluted share, charge to earnings for separation costs primarily related to the accelerated vesting of restricted stock units and stock options previously granted to its former CEO.

"Excluding the aforementioned $.03 diluted per share charge, our results for the fourth quarter and year were within our guidance," said Ronald W. Allen, interim President and CEO of Aaron's. "We had good revenue and customer growth during the quarter, and believe the results were outstanding in these challenging economic times. Our market remains large, and the high-quality, affordable basic home furnishings we provide fulfills the desires and needs of our customers.

"We continued to expand our HomeSmart weekly rental business during the quarter and had 71 HomeSmart stores open at the end of the year. Revenues of the HomeSmart stores grew to $8.6 million for the fourth quarter and $15.4 million for the year; however, the start-up expenses associated with opening these stores negatively affected earnings during the quarter by $.03 per diluted share and $.06 per diluted share for the year. We continue to be very optimistic about the future prospects for HomeSmart, but as previously stated, do not plan to open a significant number of additional HomeSmart stores until the earnings and return on investment potential of this concept are thoroughly evaluated."

During the fourth quarter, Aaron's opened 16 company-operated Aaron's Sales & Lease Ownership stores; 18 franchised stores, eight HomeSmart stores; and three RIMCO stores. The company also acquired four stores from franchisees; seven stores were acquired from a third party operator and converted to HomeSmart stores; and one company-operated store was sold to a franchisee.  In addition, during the quarter the company closed 10 company-operated stores and one franchised store.

For the 2011 year, the company opened 51 company-operated Aaron's Sales & Lease Ownership stores; 55 franchised stores; 24 HomeSmart stores and six RIMCO stores. In addition, during the year 44 stores were acquired from third-party operators and were converted to HomeSmart stores, along with one Aaron's company-operated store. Aaron's total net store count increased 7 percent for the year.

During the fourth quarter and fiscal year of 2011, the company awarded area development agreements to open 17 and 68 additional franchised stores, respectively. At the end of December 2011, area development agreements were outstanding for the opening of 230 franchised stores over the next several years.

As of Dec. 31, Aaron's had 1,144 company-operated Aaron's Sales & Lease Ownership stores; 707 Aaron's Sales & Lease Ownership franchised stores; 71 HomeSmart stores; 16 company-operated RIMCO stores, and six franchised RIMCO stores. The Company also had one Aaron's Office Furniture store. The total number of stores open at the end of 2011 was 1,945.