From Home Furnishing Business
Computer System Problems Plague Rent-A-Center in Q3
Hampered by repeated outages of its new point-of-sale system, Rent-A-Center (RCII) said third-quarter revenues fell 12.3% to $693.9 million, including a 12% decline in same-store sales in its U.S. rent-to-own stores.
The RTO powerhouse, however, reported a profit of $6.18 million or 11 cents per share, which was in line with a revised profit projection issued earlier this month.
The latest bottom-line result reversed a net loss of $4.1 million or 8 cents per share in the same quarter last year. But the prior-year quarter included a write-down of 40 cents per share as it exited the smartphone business.
CEO Robert Davis said he was “terribly disappointed in the results for the quarter, both top and bottom line” but said the new system already is helping the company lower the percentage of past due accounts.
“Toward the end of the third quarter we had seen significant improvement in system availability and a reduction in the frequency of system outages. However, over the past two weeks on a couple of instances we have experienced system slowness and outages similar to but less impactful than what we saw earlier in the third quarter,” Davis said.
The company said same-store sales at its Acceptance Now division, which provides rent-to-own services in traditional retail stores, fell 0.9%. Rent-A-Center is in the midst of pilot Acceptance Now programs with several large national retailers and Davis said he is “enthusiastic about these opportunities.”
“I continue to believe our business model provides a superior customer experience to both the retailer and the end consumer,” said Davis.
The company also slashed its earnings forecast for the 2016 calendar year to $1.05 to $1.15 per share. That was below a July forecast of $1.65 to $1.85 per share.
As of Sept. 30, the company had 2,469 Rent-A-Center stores in the United States, nine fewer than the beginning of the quarter. The company also had 1,373 staffed Acceptance Now locations -- one less than the start of the quarter -- and 495 unstaffed kiosks – a reduction of 50 from the start of the quarter.