Rent-A-Center Reports Q1 Earnings
On Monday, April 21, 2014, Rent-A-Center, Inc. (NASDAQ: RCII) announced and released its first quarter financial results. Shares of the company are fairly neutral in after-hours trading.
The company announced that total revenues were $833.7 million, representing an increase of $14.4 million from the same period a year ago. The increase of 1.8 percent was primarily due to increases of $47 million in the Acceptance Now segment and 6.4 million in the Mexico segment, which was then almost wiped out by a decrease of approximately $37.6 million in the Core U.S. segment.
The rental company had its same store sales decrease by 0.8 percent.
The company also announced that net earnings per diluted share equaled $0.57 per share, representing a $0.20 decrease from the same period a year ago.
Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc., "We are generally pleased with our results in the quarter as we reported total revenues of $834 million, an increase of $15 million year-over-year, and our adjusted net earnings per diluted share of $0.57 exceeded expectations, we remain aware of continued challenges in the macro-economic environment but our focus remains on the execution of the strategy communicated in our February investor day to build shareholder value. Customer demand was down in the Core U.S. segment as expected, but operational improvements to focus on the quality of sales by altering our promotional tactics resulted in a ticket increase compared to the fourth quarter of 2013. We are also executing an additional operational initiative as part of our multi-year program to further improve operating and financial performance in our Core U.S. segment by optimizing our store foot print and consolidating approximately 150 stores by merging those accounts into existing Rent-A-Center stores by the end of the second quarter.”
Additionally, the company issued guidance, expecting 3.0 to 6.0 total revenue growth for 2014, expecting 3.0 to 5.5 percent same store sales growth, an effective tax rate of 37 to 38 percent, and expecting to open about 100 domestic Acceptance Now kiosks.
Davis Continued, "Our growth initiatives continue to perform very well. Acceptance Now revenues were over $174 million in the quarter, an increase of 37%, and contributed approximately 21% of our total revenues and approximately 36% of our total operating profit. In addition, we have begun our virtual kiosk test which we believe will further unlock growth for us. Mexico grew revenues over 67% and ended the quarter with 173 locations. While it is still very early in the Mexico City urban store test, we are pleased with the results.”
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