Rent-A-Center, Inc. Announces Preliminary Second Quarter 2014 Results
Estimated Diluted Earnings per Share in a range of
Estimated Total Revenues of
Initiates Smartphone Rollout
Second Quarter 2014 Preliminary Results
The Company expects the following financial results for the quarter
ended
-
Total revenues are estimated to be approximately
$773 million . - Same store sales are estimated to have increased approximately 0.6%.
-
Net earnings per diluted share are expected to be in the range of
$0.31 to $0.33 . -
Adjusted net earnings per diluted share are expected to be in the
range of
$0.36 to $0.38 , when excluding a pre-tax restructuring expense of approximately$4.4 million , or approximately$0.05 per diluted share, related to the consolidation of approximately 150 stores into existing Core U.S. stores.
“Macro-economic pressures continue to burden our financially constrained
customers contributing to softer than expected demand in our U.S.
business segments. Consequently, revenue and earnings for the second
quarter 2014 will not meet expectations. We are not satisfied with our
second quarter results and hold ourselves accountable for improving our
performance. To that end, we are excited to announce a new product line
in our domestic retail stores with our entrance into the burgeoning
smartphone business,” said
Smartphone Rollout
The Company’s smartphone rollout offers consumers nationwide one-stop
shopping for a variety of leading, name-brand smartphones and
no-contract plans, a rent-to-own industry first. It also provides
ground-breaking flexibility: Phones may be rented in connection with the
immediate activation of a no-contract airtime plan, or without. A choice
in the brand of airtime plans is offered, and customers may even opt to
activate a plan for a phone not rented through
Launched this week, the smartphone rollout across Rent-A-Center’s 2,800-plus Core U.S. stores is expected to be completed by month’s end and was spurred by the success of a pilot program launched last summer.
Boasting the latest Samsung Galaxy smartphones including Galaxy S® III,
Galaxy S® 4, Galaxy S® 5, Galaxy Note® II, Galaxy Note® 3 and Galaxy S®
Relay at launch,
The offer is expected to appeal to cash- and credit-strapped consumers put off by the high upfront cost of acquiring a smartphone.
Competitively priced with no credit check, deposit or long-term
contract, the
“There’s already a pronounced appetite for smartphones and no-contract
airtime plans,” said Mr. Davis. “By heightening flexibility and choices
while lessening a consumer’s initial cash outlay, we believe we have
meaningfully enhanced this product,” Mr. Davis said. “While the roll-out
of the smartphone product is part of a plan to address our business
performance, we are also in the midst of a multi-year program designed
to transform and modernize our operations company-wide in order to
improve the profitability of our Core U.S. segment while continuing to
support our Acceptance Now and
On
This press release and the guidance above contain forward-looking
statements that involve risks and uncertainties. Such forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "should," "anticipate," or "believe," or the negative
thereof or variations thereon or similar terminology. The Company
believes that the expectations reflected in such forward-looking
statements are accurate. However, there can be no assurance that such
expectations will occur. The Company's actual future performance could
differ materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to: the
general strength of the economy and other economic conditions affecting
consumer preferences and spending; economic pressures, such as high fuel
costs, affecting the disposable income available to the Company's
current and potential customers; changes in the unemployment rate;
difficulties encountered in improving the financial performance of the
Core U.S. segment; the Company’s ability to develop and successfully
execute the competencies and capabilities which are the focus of the
Company’s multi-year program designed to transform and modernize the
Company’s operations; costs associated with the Company's multi-year
program designed to transform and modernize the Company’s operations;
the Company’s ability to successfully market smartphones and related
services to its customers; the Company's ability to develop and
successfully implement digital electronic commerce capabilities; our
ability to retain the revenue from customer accounts merged into another
store location as a result of the store consolidation plan;
uncertainties regarding additional costs and expenses that could be
incurred in connection with the store consolidation plan; the Company's
ability to execute and the effectiveness of the store consolidation;
rapid inflation or deflation in prices of the Company's products; the
Company's available cash flow; the Company's ability to identify and
successfully market products and services that appeal to its customer
demographic; consumer preferences and perceptions of the Company's
brand; uncertainties regarding the ability to open new locations; the
Company's ability to acquire additional stores or customer accounts on
favorable terms; the Company's ability to control costs and increase
profitability; the Company's ability to enhance the performance of
acquired stores; the Company's ability to retain the revenue associated
with acquired customer accounts; the Company's ability to enter into new
and collect on its rental or lease purchase agreements; the passage of
legislation adversely affecting the rent-to-own industry; the Company's
compliance with applicable statutes or regulations governing its
transactions; changes in interest rates; adverse changes in the economic
conditions of the industries, countries or markets that the Company
serves; information technology and data security costs; our ability to
protect the integrity and security of individually identifiable data of
our customers and employee; the impact of any breaches in data security
or other disturbances to our information technology and other networks;
changes in the Company's stock price, the number of shares of common
stock that it may or may not repurchase, and future dividends, if any;
changes in estimates relating to self-insurance liabilities and income
tax and litigation reserves; changes in the Company's effective tax
rate; fluctuations in foreign currency exchange rates; the Company's
ability to maintain an effective system of internal controls; the
resolution of the Company's litigation; and the other risks detailed
from time to time in the Company's
Source:
Rent-A-Center, Inc.
David E. Carpenter, 972-801-1214
Vice
President of Investor Relations
david.carpenter@rentacenter.com