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Rent-A-Center Suffers Rough Q4

For the fourth quarter, and as it put in place a new strategic plan, Rent-A-Center posted net earnings and diluted earnings per share of $34.8 million and 65 cents versus a net loss and diluted loss per share of $146.4 million and $2.76 in the year-earlier period.

Adjusted to exclude special items, fourth quarter net loss was $22.1 million, or 41 cents per diluted share, versus a net loss of $12.4 million, or 23 cents per diluted share, in the year-previous period.

Total revenues declined 6.6% versus the year-before quarter to $639 million primarily due to closures of certain Acceptance Now locations, a comparable store sales decline of 2% and hurricane activity. Operating loss was $54.9 million as compared to an operating loss of $159.3 million in the year-prior fourth quarter.

Core U.S. Rent-A-Center revenues came in at $444.7 million, down 6% primarily due to a comp decline of 3.6%, hurricane impact and U.S. store base rationalization. Acceptance Now fourth quarter revenues were $175.8 million, down 9.1% primarily due to closures of its Conn’s and HHGregg locations as well as hurricane effects.

For the full fiscal year, net earnings were $6.7 million, or 12 cents per diluted share, versus a net loss of $105.2 million, or $1.98 per diluted share, in the year earlier. Adjusted to exclude special items, Rent-A-Center indicated, net loss was $28.7 million, or 54 cents per diluted share, versus net earnings of $40.9 million, or 77 cents per diluted share.

Total revenues were $2.7 billion versus $2.96 billion in the fiscal year before. Operating loss was $63.1 million as compared to an operating loss of $66.6 million in the year prior. Adjusted to exclude special items, operating loss was $3.8 million versus operating profit of $105 million in the year before.

Mitch Fadel, Rent-A-Center CEO, said “The fourth quarter performance was more challenging than the company expected and demonstrated the need for change. In order to improve company performance, we are focusing our attention on reducing costs and improving cash flow. We also intend to improve traffic trends through a more targeted value proposition and customer-centric approach. In addition, we have initiated efforts to more aggressively expand our franchising operations in order to enhance our brand in a more capital-efficient way.”