By RTT News, October 04, 2013, 09:03:00 AM EDT
(RTTNews.com) - Specialty retailer Aaron's, Inc. ( AAN ) Friday reduced its third-quarter revenue and earnings guidance, adding that the company's share repurchase authorization has been increased to 15 million shares. The stock fell more than 6 percent in pre-market activity.
Ronald Allen, CEO, said, ''Revenue and customer growth for the third quarter were below our expectations. Our customers continue to struggle in the current economic environment, and although traffic remains good in most stores, we are having challenges gaining customers.''
According to him, same store revenue and customer growth in company-operated stores were basically flat during the quarter, and shipments of products to franchisees were less compared to the third quarter last year.
It is expected that third quarter results will include an additional accrual of $13 million related to a pending regulatory investigation by the California Attorney General into Aaron's leasing, marketing and privacy practices.
On a non-GAAP basis, the company lowered its third-quarter earnings per share guidance to a range of $0.37 to $0.41 from the previous guidance of $0.48 to $0.52. On average, 11 analysts polled by Thomson Reuters expect earnings of $0.49 per share for the quarter. Analysts' estimates typically exclude special items.
GAAP earnings per share guidance was cut to a range of $0.25 to $0.29 from the previous guidance of $0.48 to $0.52. GAAP earnings will include the anticipated additional regulatory investigation accrual.
The company reduced its revenue guidance for the quarter to $540 million from approximately $550 million. Analysts expect earnings of $549.69 million for the quarter.
Further, the Aaron's Board of Directors authorized the repurchase of approximately 11 million additional common shares over the existing authorized amount, bringing the total number of Aaron's common shares currently authorized for repurchase to 15 million.
The stock, which closed at $27.66 on Thursday, is down 6.3 percent in pre-market activity.
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