Aaron’s Q2 profits down; hints at store closings

Rent-to-own giant Aaron’s saw its revenues rise but profit drop in the second quarter, and the retailer said it would review its store base going forward.



Net earnings, which beat analyst expectations, decreased 5% to $38.5 million from $40.5 million last year. Revenues for the quarter ended June 30, rose 2.6% to $789.4 million from $769.0 million in the year-ago period. The increase was fueled by strong growth at the company’s Progressive unit, which provides lease-to-own options at furniture stores. Same-store revenues (company-operated stores) open for the entirety of both quarters) decreased 1.2%.



“Progressive had an exceptional quarter,” said John Robinson, president and CEO of Aaron's. “The team is executing well across all aspects of the business, and we believe the acceleration in door growth is a positive indicator of future revenue."



Robinson added that a soft demand environment for Aaron's core business continued to impact lease activity, which was below the company’s expectations.



"In light of the core results, we're taking steps to further address our expense structure, including a thorough review of our store base,” he said. “We are encouraged by stabilizing trends in comparable store revenues and merchandise write offs over the last few quarters. During the quarter, we also completed the sale of the assets of HomeSmart, which will enable us to sharpen our focus on the performance of our Aaron's store business."



At June 30, 2016, Aaron’s had 1,221 company-operated Aaron's Sales & Lease Ownership stores, 721 franchised Aaron's Sales & Lease Ownership stores, and one remaining franchised HomeSmart store.