Rent-A-Center, Inc. (RCII), a provider of household durable products under rental purchase agreements, Monday reported a rise in profit for the third quarter, despite lower revenues, helped by lower operating and interest expenses. The company's per share earnings topped analysts' estimate by 4 cents. The company also provided guidance for the fourth quarter of fiscal 2009 and full year 2010.
Net earnings for the third quarter increased to $36.84 million or $0.55 per share from $29.38 million or $0.44 per share in the previous year. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.51 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the third quarter of the previous year included the effects of a $0.2 million pre-tax restructuring expense related to the restructuring plan announced earlier. The restructuring expense had no impact on the earnings per share in the third quarter of 2008.
The Plano, Texas-based company's total revenue for the quarter declined to $671.25 million from $708.75 million last year. Eight analysts had a consensus revenue estimate of $677.82 million for the third quarter.
The company noted the decrease in revenues was primarily the result of a 6.1% reduction in same store sales, predominantly attributable to a decrease in the number of units per customer and the anticipated revenue attrition from about 365 stores that received customer agreements from stores closed in the 2007 restructuring plan.
Store revenue declined to $663.43 million from $699.61 million a year ago. Franchise merchandise sales declined to $6.66 million from $7.97 million last year. Royalty income and fees were $1.16 million, down from $1.18 million in the comparable quarter last year.
Total operating expenses for the quarter declined to $606.88 million from $650.21 million in the previous year. Interest expense declined to $4.87 million from $15.04 million a year ago.
For the nine-month period, net earnings rose to $124.16 million or $1.86 per share from $103.48 million or $1.54 per share in the same period of the previous year. Total revenue for the period declined to $2.08 billion from $2.18 billion last year.
For the fourth quarter, earnings are estimated to be in the range of $0.55 to $0.61 per share. The company expects total revenues to be in the range of $662 million to $677 million. Analysts expect the company to report earnings of $0.57 per share on revenues of $692.25 million for the next quarter.
For the fiscal 2010, earnings are expected to be in the range of $2.30 to $2.50 per share on revenues in the range of $2.736 billion and $2.796 billion. Analysts currently expect earnings of $2.50 per share on revenues of $2.85 billion for the full year 2010.
RCII closed Monday's regular trading at $20.42, down 0.21 or 1.02%, on a volume of 929K shares on the Nasdaq. In after hours, the stock further went down 1.92 or 9.40%, trading at $18.50.
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