In a strategic move to focus on its key business segments, the
leading rent-to-own operator,
) has sold out all assets of its RIMCO operations to its
competitor, Rent-A-Wheel /Rent-A-Tire for an undisclosed amount.
RIMCO and Rent-A-Wheel /Rent-A-Tire engage in selling of leasing
of automobiles, tires and rims through their stores.
RIMCO was a small business unit of Aaron's that generated
annual revenue of approximately $20 million from its 32 stores in
11 states. The sale of the asset will enable Aaron's to focus on
improvising the performance of its namesake and HomeSmart
Aaron's has been witnessing soft top and bottom-line
performances for the last several quarters. Last week, this
Atlanta-based rent-to-own operator lowered its fourth-quarter and
full-year 2013 guidance based on lower-than-expected revenues and
limited customer growth in the fourth quarter.
The company trimmed its fourth-quarter revenue expectation to
$555 million from $575 million projected earlier. For 2013,
Aaron's now anticipates revenues of $2.24 billion, down from its
earlier guidance of $2.26 billion.
The downward revision was primarily due to the prevalent
sluggish economic environment. The company's comparable sales and
customer growth fell 1% year over year in the fourth quarter.
Moreover, shipments of franchised products declined from the
year-ago comparable quarter.
The company believes that the current business environment
will not change significantly in the near term. Looking at the
current business scenario, Aaron's now intends to slow down the
pace of opening namesake and HomeSmart stores and expects net new
store growth to remain under 4% in 2013.
Considering the above-mentioned factors, the company lowered
its earnings guidance range for the fourth quarter and 2013. The
company now projects earnings between 27 cents and 31 cents per
share, down from its previous guidance range of 38-42 cents. The
current Zacks Consensus Estimate is pegged at 29 cents per
Similarly, for 2013, GAAP earnings are anticipated to come in
the range of $1.56-$1.60 per share versus $1.67-$1.71 guided
earlier. On a non-GAAP basis, excluding the regulatory
investigation as well as retirement and vacation related charges
accrued in the third quarter, earnings are expected to come in
the range of $1.84 to $1.88 per share, down from previous
projection of $1.95 to $1.99. Currently, the Zacks Consensus
Estimate stands at $1.86 per share.
Most retailers reported lackluster results for the holiday
shopping period this year, followed by trimmed forecasts, as
retailers suffered from lower traffic, an intensified promotional
environment, lesser shopping days between Thanksgiving and
Christmas, ice storms and sluggish consumer spending. Retailers
that lowered their guidance battered by the holiday results
Family Dollar Stores Inc.
American Eagle Outfitters Inc.
L Brands Inc.
Currently, Aaron's carries a Zacks Rank #5 (Strong Sell).
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