Rent-to-own News - Aarons puts brakes on new store openings

According to an article in the Atlanta Journal-Constitution, Charlie Loudermilk, board chairman and chief executive officer of Aaron Rents' explained at the company's annual meeting today, why the rent-to-own chain's stock hit a one-year low of $13.27 during day trading in January.

"We made a mistake in saying we'd open 250 stores last year," Loudermilk said at the Atlanta meeting, according to the article. "We only opened 200 [stores]. The next 50 stores opened over the following three months, but "we should've said we'd open 150."

Atlanta-based Aaron's stock rebounded from the free fall, clocking in at $23.98 per share on May 5. First quarter earnings released April 22 beat analyst estimates by 6 cents, for 46 cents a share. And revenue last quarter was up 13 percent to $437.3 million.

Aaron Rents has 1,560 stores and about 500 are franchisee-owned.

Loudermilk said the company will slow down opening new stores, holding to 10-13 percent growth per year.

"We're not going to open as many stores," he said, because of "new store drag," according to the report.

Loudermilk explained that new stores typically lose money for about 10 months. He also said it appears the housing slump won't affect Aaron Rents, but the jury is out on whether tax rebate checks will be a boon to business.

"It could help us — big time help us," he said. "But customers may pay off debt. We don't know."

For full text of the article, click here.

mevans@rtohq.org