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From Home Furnishing Business

Rent A Center Sales Up for Q4 and 2013

January 29, 2014  by in Financial Reports, Industry, Rent-To-Own   

Total revenues for 2013's fourth quarter ended were $769.6 million, an increase of 1.5 percent compared the same period in the prior year, primarily due to an increase of approximately $38.9 million in the Acceptance Now segment and approximately $4.3 million in the International segment, partially offset by a decrease of approximately $28.7 million in the Core U.S. segment.

Same store sales declined 1.1 percent for the period, primarily attributable to a 5.5 percent decrease in the Core U.S. segment, partially offset by increases of 26.4 percent and 25.7 percent in the Acceptance Now and International segments, respectively.

“We continue to face meaningful headwinds in our domestic U.S. rent-to-own business, including a customer under severe economic pressure and an intensified promotional environment," Mark E. Speese, the company’s Chairman and Chief Executive Officer. These conditions significantly impacted our Core U.S. segment customer agreement growth in December, which was the most challenging in years. While our Acceptance Now segment grew quarterly revenue over 41% year-over-year, this business also faced similar challenges and did not meet our revenue target. As a result, revenue and earnings for the fourth quarter and year ended December 31, 2013 are well below expectations."

Net earnings in the fourth quarter of $13.1 million were down from $47.2 million for the same period in 2012. These results include dilution related to the Company's international growth initiatives of approximately $0.09 per share for the quarter ended December 31, 2013, and approximately $0.07 per share for the same period in the prior year. The $0.55 year-over-year decline in net earnings per diluted share for the quarter ended Dec. 31 is largely attributable to a reduction in gross profit in the Core U.S. segment and an overall increase in operating expenses.

“In addition to the extremely disappointing gross profit miss in the Core U.S. segment, several unexpected operating expenses negatively impacted the fourth quarter,” said Robert D. Davis, CFO and CEO-designate of Plano, Texas-based Rent-A-Center. “Some examples of these expenses include claims paid under our self-funded health insurance program, an adjustment to on-rent merchandise reserves, and severance payable to former executives of the Company,” Mr. Davis continued.

Total 2013 revenues of $3.1 billion were up O.7 percent from the prior year, primarily due to increases of approximately $158.8 million in the Acceptance Now segment and approximately $18.2 million in the International segment, substantially offset by a decrease of approximately $147.9 million in the Core U.S. segment.

Same-store sales in 2013 decreased 2 percent, primarily attributable to a 6.4 percent decrease in the Core U.S. segment, partially offset by increases of 30.1 percent and 40.6 percent in the Acceptance Now and International segments, respectively.

Net earnings in 2013 fell from $181.7 million the prior year to $128.2 million. These results include dilution related to the company's international growth initiatives of approximately $0.32 per share for the year ended Dec. 31, and $0.33 per share in the prior year.

“Obviously, we are deeply disappointed in the conclusion of 2013 and recognize the challenges we face to improve the results in our Core U.S. segment in 2014 and beyond," Speese said. "We continue to believe strongly in the long-term potential of our growth initiatives and in our ability to improve execution in the core business.

Rent-A-Center owns and operates approximately 3,205 stores in the United States, Canada, Mexico and Puerto Rico; and approximately 1,325 Acceptance Now kiosk locations in the United States and Puerto Rico.

Click here for the complete release from Rent-A-Center.