Rent-A-Center Reports Bumpy Q4

Although the company could not post GAAP net or per diluted per share loss as it determines income tax effects of goodwill impairment, Rent-A-Center reported that its fourth quarter loss before income taxes was $170.9 million versus a $1.13 billion loss in the period a year prior including a $1.17 billion goodwill impairment charges taken in the core business segment in the United States.

Goodwill impairment testing performed for the 2016 fourth quarter resulted in recognition of a $151.3 million impairment, the company stated.

Without the impairment charges and other special items, fourth quarter loss before income taxes was $21.5 million versus earnings before income taxes of $41.5 million for the 2015 frame, the company pointed out, and diluted loss per share was 23 cents versus earnings of 54 cents in the year-earlier period.

Total revenues were $684.1 million versus $793.8 million in the 2015 fourth quarter.

Comparable store sales slipped 9.6% in the quarter versus the year-previous period with core U.S. down 14.2%, Acceptance Now up 1% and Mexico down 1.8%.

Core U.S. revenues of $472.9 million in the fourth quarter were down 17.6% year over year, primarily due to lower comps and the continued rationalization of the division’s store base. In the quarter year over year, Acceptance Now revenues decreased 1.7% to $193.5 million on lower store count partially offset by higher purchase volume and Mexico revenues decreased 23.9% on lower comps, location closings and currency fluctuations. Franchising revenues in the quarter decreased 23.2% versus the year-before quarter.

“As previously announced, the fourth quarter proved to be much more challenging than expected due to recovery challenges from the POS system outages in the previous quarter, heavy promotional activity and historically high delinquencies,” said Mark Speese, Rent-A-Center interim CEO. “Today, we are intensely focused on turning the core business around by improving our product mix, delivering a better value proposition for customers, stabilizing our workforce and improving our account management. Within the Acceptance Now business, we recently signed pilot agreements for the first time with two new national retailers representing a significant scale opportunity. We are leveraging technology investments and new capabilities to enable or accelerate our business strategies and to better serve and engage customers. We remain committed to taking all necessary actions to execute our turnaround and are moving forward with urgency to drive improved results and shareholder value, including an execution of a cost rationalization plan to achieve approximately 6% reduction in the field support center workforce.”