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Aaron’s avoided a takeover attempt earlier this month, but an almost 25 percent drop in first-quarter profit and continuing slowness in customer traffic signal the Atlanta-based company still has challenges.
The rent-to-own giant reported Friday that net earnings fell to $38.3 million, or 53 cents a share, in the quarter ended March 31. That is down from $51 million, or 67 cents a share, in the same period a year earlier.
Revenue dipped 1 percent to $585.4 million, from $593 million.
The results come as Vintage Capital Management, an Orlando private equity firm, is still considering acquiring the company.
Vintage made a $2.3 billion unsolicited bid for Aaron’s in February but withdrew it last week after Aaron’s board rejected the offer. Aaron’s also announced last week that it had purchased online lender Progressive Finance for $700 million, ostensibly making Aaron’s more expensive.
“At this point we are weighing our options,” Brian Kahn, managing member, said Friday. He said a decision about making another bid could be made in the next two weeks.
Vintage is Aaron’s second-largest shareholder with about 10 percent of the company’s stock.
Aaron’s recent troubles and the Vintage bid led to some tense moments between Aaron’s Chief Executive Officer Ron Allen and franchisees questioning the company’s direction during an annual conference last month in Orlando.
On a conference call with analysts Friday, Allen asked analysts to refrain from asking questions about Vintage and to focus on the company’s quarterly performance and the Progressive acquisition.
Allen, a former Delta Air Lines chief executive who become Aaron’s CEO in February 2012, blamed some of the first-quarter problems on weather. About 70 percent of company-operated stores were adversely affected by bad weather, which included record-setting snow storms in winter and into early spring.
“Let me be clear, we are not happy with these recent results and are focused on improving performance in both the immediate future and long-term,” he said.
Allen said revenue at company-operated stores open at least one year dropped 2.1 percent in the quarter compared with the same period last year. Customer traffic dipped 1.4 percent.
For company-operated stores open at least two years, same-store revenue dropped 3.7 percent while traffic dropped about 1 percent.
“This includes a significant number of store closings as well as elevated utility and maintenance expenses,” he said. Allen estimated the revenue hit from bad weather at $5.5 million to $6.5 million and the profit hit at 5 cents to 6 cents a share.
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