Rent-A-Center Third-Quarter Sales Up 20.9%

October 29, 2007  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on October 2007 Rent-to-own retailer Rent-A-Center Inc., Plano, Texas, announced Monday that third-quarter 2007 sales rose 20.9 percent over last year to $709.7 million, an increase largely driven by the acquisition last November of Rent-Way. Earnings of $25.3 million were up 0.4 percent from third-quarter 2006.

Same store revenues for the quarter ended September 30, 2007 decreased 1.8 percent, and the company reduced outstanding debt by around$31.2 million.

“Our third quarter financial results for total revenue and earnings per diluted share were within our guidance range; however, the business environment was very challenging throughout the quarter,” said Mark E. Speese, Rent-A-Center’s chairman and chief executive officer. “Although we believe that our customer continues to face financial challenges, we have been encouraged by the positive results from our operational initiatives, as well as an increase in demand in October. As we prepare to enter 2008, we intend to focus on enhancing store level operations, improving operational efficiencies, and further investing in our financial services business, while maintaining a solid balance sheet.”

The company also announced that it has reached a prospective settlement with the plaintiffs to resolve Terry Walker, et al. v. Rent-A-Center, Inc., et al., a putative class action filed in federal court in Texarkana, Texas, alleging that the company and certain of its current and former officers and directors violated various federal securities laws. Under the terms contemplated, the company anticipates its insurance carrier will pay an aggregate of approximately $3.6 million in cash, which will be distributed to an agreed upon class of claimants who purchased the company’s common stock from April 25, 2001 through Oct. 8, 2001, as well as used to pay costs of notice and settlement administration, and attorneys’ fees and expenses. In connection with the settlement, neither the company nor any officer and director defendants are admitting liability for any securities laws violations.

The terms of the prospective settlement are subject to the parties entering into a definitive settlement agreement and obtaining court approval. While the Rent-A-Center believes that the terms of this prospective settlement are fair, there can be no assurance that the settlement, if completed, will be approved by the court in its present form. Rent-A-Center expects its insurance carrier to fund the prospective settlement and related costs.