NEWSLETTERS - Aaron's Q3 revenues up 7%, same store up 5.3%

Aaron's Q3 revenues up 7%, same store up 5.3%

Aaron's today, announced revenues and earnings ending September 30, 2011, including a third quarter revenue increase of 7% to $485.2 million compared to $452.2 million for the same period of last year.

Net earnings were $28.0 million versus $26.2 million in 2010. Diluted earnings per share were $.36 compared to $.32 per share a year ago, a 13% increase.

For the first nine months of this year, revenues increased 8% to $1.501 billion compared to $1.392 billion for the same period of 2010. Net earnings were $83.2 million versus $87.6 million last year. Diluted earnings per share in 2011 were $1.04 versus $1.07 in 2010.

Excluding a lawsuit related charge in the second quarter, net earnings for the nine months of 2011 would have been $105.8 million and diluted earnings per share excluding the lawsuit related charge would have been $1.32, a 23% increase over the nine months of last year.

"Although diluted earnings per share for the third quarter were within our previously provided guidance, the results were at the lower end of expectations. Margins were affected during the quarter by higher depreciation expense on lease merchandise, primarily as a result of an increase in lower margin early payouts of agreements, and the costs of rapidly increasing the number of HomeSmart stores. The HomeSmart weekly pay concept, which continues to be in the experimental mode, is showing a lot of promise but we expect start-up costs to negatively affect earnings for the next several quarters. We currently plan to have approximately 70 HomeSmart stores open by the end of this year and then not open a significant number of additional stores until we can more fully evaluate the financial performance of the HomeSmart concept," Mr. Loudermilk added.

Same store revenues (revenues earned in Company-operated stores open for the entirety of both periods) increased 5.3% during the third quarter of 2011 compared to the third quarter of 2010. Same store revenues increased 3.8% for Company-operated stores open over two years at the end of September 2011.

The Company had 961,000 customers and its franchisees had 520,000 customers at the end of the third quarter of 2011, a 9.8% increase in total customers over the number at the end of the third quarter a year ago (customers of our franchisees, however, are not customers of Aaron's, Inc.). The customer count on a same store basis for Company-operated stores was up 6.3% in the third quarter compared to the same quarter last year.

During the first nine months of this year the Company generated over $296 million of cash flow from operations and had $218.9 million of cash on hand at the end of September 2011.

The Company repurchased 3,621,563 shares of Common Stock during the third quarter representing a total cash outlay of $89.7 million. In the first nine months of 2011 the Company repurchased 5,076,675 shares at a cost of $127.2 million. The Company has the authorization to purchase an additional 5,281,344 shares of its Common Stock.

As previously announced, during the third quarter the Company received $125 million from the issuance of senior unsecured notes in a private placement. These funds will be used for general corporate purposes and for the repurchase of Company stock from time to time.

Subsequent to the end of the third quarter, the Company received regulatory approval for its previously announced ten million British pound investment in Perfect Home Holdings Limited, a U.K. rent-to-own company.

See full report here.