Rent-A-Center, Inc. (RCII) Falls On Lower 4th Quarter Results
Founded in 1986, Rent-A-Center, Inc. provides high quality durable products such as major consumer electronics, appliances, computers, and furniture and accessories under flexible rental purchase agreements that typically allow the customer to obtain ownership of the merchandise at the end of the rental period.
Shares of Plano, Texas, based Rent-A-Center, Inc. (RCII), fell sharply on Tuesday, against the backdrop of a strong upturn in stocks overall. Rent-A-Center's stock fell 13.65%, dropping $4.78 per share, to close at 30.25, on volume of 5,021,443 shares. The company reported that both earnings and revenue for the fourth quarter of 2014 came in below analysts expectations.
On Monday, after the market closed, Rent-A-Center reported that the company's earnings per diluted share for the fourth quarter of 2014 came in at $.50 per share, compared to $.25 per share in the fourth quarter of 2013. However, the consensus expectation was $.63 per share.
Total fourth quarter revenue was reported at $796.5 million, compared to $776.2 million for the same quarter one year earlier. But again, revenues fell short of the consensus estimate of $805 million that investors were expecting.
For all of 2014, Rent-A-Center reported net income of $1.95 per share, against $2.33 per share in 2013. Total revenue for 2014 came in at $3.158 billion, compared to $3.094 billion in 2013.
On a brighter note, same store sales increased by 4.7% overall. However, same store sales in the company's Core US stores decreased by .6%. The company attributed the decline in same store sales at Core US locations to the 150 store consolidation completed in the second quarter of 2014. This was offset by a 28.4% increase in same store sales in the company's Acceptance Now division, and a 17% increase in the company's stores in Mexico.
Rent-A-Center is now projecting 2015 earnings to come in between $2.05 and $2.30 per share. They are also projecting revenue to come in at between $3.25 billion and $3.35 billion.
Said Robert D. Davis, the Chief Executive Officer of Rent-A-Center, Inc., "During the fourth quarter, Core U.S. same store sales were essentially flat and Acceptance Now continued to deliver strong same store sales growth. This resulted in total company same store sales of approximately 5 percent for the quarter. In addition, Core U.S. operating profit increased year over year for the first time in many quarters. However, our EPS did not meet our expectations because our margins were not as strong as projected and skip/stolen losses were too high. In short, we did not achieve the desired balance between sales growth and margin improvement that we ideally are seeking through our strategies."
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