Rent-A-Center 1Q profit falls; cuts 2013 guidance
Rent-A-Center posts smaller 1Q profit and cuts 2013 guidance, blaming taxes, gas prices
PLANO, Texas (AP) -- Furniture and electronics rental company Rent-A-Center said Monday that its first-quarter net income fell, and it cut its 2013 guidance, saying that delayed tax refunds and high fuel prices meant less money in its customers' pockets.
The company said first-quarter net income fell 11 percent to $46.5 million, or 80 cents per share, for the quarter that ended March 31. That was down from $51.9 million, or 88 cents per share, during the same period last year.
Revenue fell almost 2 percent to $819.3 million, from $835.3 million a year earlier.
Analysts surveyed by FactSet had been expecting a profit of 87 cents per share on revenue of $842.8 million.
Sales at stores open at least a year — a key metric in the retail business — fell 4.3 percent.
Revenue fell 8 percent in its core U.S. segment, to $669.6 million. It had fewer rent-to-own agreements with customers. The business was also hurt by delayed issuance of federal tax refunds, fuel prices, and higher payroll taxes. The company said that demand has gotten better in recent weeks, but it still cut its guidance.
The company said it now expects 2013 revenue to grow 3.5 percent to 5.5 percent, which would put it at $3.19 billion to $3.25 billion, based on 2012 revenue. In January it had said it expected revenue to grow 5 percent to 8 percent.
It predicted earnings per share of $2.95 to $3.10, down from an earlier forecast of $3.25 to $3.40 a share. Analysts surveyed by FactSet had been expecting a 2013 profit of $3.31 per share with revenue of $3.25 billion.
Some of that decline in its core stores was offset by rapid growth in its RAC Acceptence unit, which allows customers to get merchandise from Rent-A-Center partners without a credit check, and own it once they've made enough payments. Revenue in that unit jumped 45 percent to $127.2 million. The unit's operating profit jumped to $15.9 million, from $2.9 million a year ago. The company said the unit now accounts for 16 percent of Rent-A-Center revenue and 20 percent of its operating profit.
Shares of Rent-A-Center Inc. had risen 46 cents to close at $35.90 before the results were released. They fell $2.35, or 6.6 percent, to $33.55 in extended trading.
