Rent-A-Center's 4Q revenues jump 9.3%
By Furniture Today Staff -- Furniture Today, February 11, 2008
Plano, Texas — Rent-A-Center reported higher revenues and a small same-store gain in the fourth quarter, but posted a $5.4 million net loss because of one-time charges for restructuring and a lawsuit settlement.
The largest U.S. rent-to-own merchant said Monday that its revenues in the quarter were up 9.3% to $717 million, mainly because of the November 2006 acquisition of rival Rent-Way. Same-store revenues in the quarter were up 1% from a year earlier.
Pretax restructuring charges of $38.7 million for a previously announced store consolidation plan and $11 million to settle a California labor lawsuit resulted in the net loss, the company said. Two actions in state court in Los Angeles had accused the company of violating state wage and hour laws, and the settlement funds will be distributed to a class of employees who worked for Rent-A-Center from May 1998 through March 31 of this year.
"We are generally pleased with the results for the fourth quarter, when we saw positive same-store sales and total revenue, and adjusted diluted earnings per share that was within our guidance range," said Chairman and CEO Mark Speese.
The $5.4 million net loss for the quarter compared with a $2.3 million loss in the same period of 2006, when earnings also were reduced by big pretax charges — $58 million to settle a New Jersey consumer lawsuit and a $2.6 million refinancing expense.
Adjusted diluted earnings per share, excluding the one-time charges, came to 42 cents in the quarter, the company said.
For the full year, total revenue was up 19.4% to $2.9 billion, mainly because of the Rent-Way buy. Same-store revenue rose 2.1%. Net earnings of $76.3 million for the year were down 26% from 2006.
| Rent-A-Center | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/31 | 2007 | 2006 | Change |
| (a) Includes franchisee merchandise sales of $10 million in the 2007 quarter, $9.6 million in the 2006 quarter, $34.2 million in the 2007 year and $36.4 million in the 2006 year. Also includes royalty income and fees of $1.1 million in both the 2007 and 2006 quarters, $8.8 million in the 2007 year and $4.9 million in the 2006 year. (b) Includes pretax litigation expense of $11 million in the 2007 quarter, $58 million in the 2006 quarter, $62.3 million in the 2007 year and $73.3 million in the 2006 year. Also includes restructuring expense of $38.7 million in the 2007 quarter and year, and refinancing expense of $2.6 million in the 2006 quarter and $4.8 million in the 2006 year. | |||
| Revenues (a) | $716,963,000 | $656,126,000 | 9.3% |
| Operating income | 64,005,000 | 80,124,000 | (20.1%) |
| Net income (b) | (5,361,000) | (2,320,000) | |
| Earnings per share | (0.08) | (0.03) | |
| Year ended 12/31 | 2007 | 2006 | Change |
| Revenues (a) | $2,906,121,000 | $2,433,908,000 | 19.4% |
| Operating income | 320,934,000 | 300,817,000 | 6.7% |
| Net income (b) | 76,268,000 | 103,092,000 | (26.0%) |
| Earnings per share | 1.10 | 1.46 | (24.7%) |
