In the midst of an acquisition process, Rent-A-Center posted an earnings increase for its second quarter while its ongoing merger was questioned in court.
Earnings for the second quarter were $13.8 million, versus a loss of $8.9 million in the year prior period. Adjusted earnings, excluding one-time items, were $25.6 million, versus a loss of $596,000 in the year prior quarter.
Net revenues were $655.7 million versus $677.6 million in the year prior quarter. Operating profit was $27.2 million and $43.6 million adjusted as compared to an operating loss of $873,000 and an operating profit of $10.2 million adjusted. Comparable store sales gained 3.7% year over year.
“We are extremely pleased with both the top and bottom line performances for the second quarter, across all operating segments,” said Mitch Fadel, Rent-A-Center CEO. “Positive consolidated same-store sales of 3.7% improved sequentially in each month within the quarter and across all operating segments. This was driven by sequential customer growth in the core, and strong demand in Acceptance Now primarily due to the value proposition enhancements. In addition, the company’s cost savings initiatives continue to outperform our internal goals, further strengthening the EBITDA performance. Finally, the announced transaction with Vintage Capital Management, which reflects a sizable premium, was made possible by the significant progress made to materially improve performance.”
On June 17, the retailer entered into a merger agreement that would lead to Vintage Rodeo Parent, an affiliate of Vintage Capital Management, acquiring all outstanding shares of Rent-A-Center common stock for $15 per share in cash, the company noted.
However, according to the website Law360, a Rent-A-Center investor has filed a complaint in Delaware federal court requesting it stop the company’s sale. The site reported that stockholder Shiva Stein filed the suit against Rent-A-Center, Fadel and several board members, claiming that a July 18 proxy statement filed with the United States Securities and Exchange Commission soliciting votes for the merger did not include some financial projections and other information required.
Contacted by HomeWorld Business, a spokesperson for Rent-A-Center said the company does not comment on pending litigation.