Rent-A-Center Profit Misses Estimates, Cuts FY Outlook; Stock - Update

(RTTNews) - Rent-A-Center Inc. (RCII), the rent-to-own home appliances retailer, Monday reported a lower third-quarter profit, hurt by poor margins that offset a growth in revenue. Both earnings and revenue for the quarter fell short of Wall Street estimates.

Looking ahead to 2013, the company cut its earnings and revenue outlook. Shares of the company dropped over five percent in the initial after-hours trading on the Nasdaq, but later recovered to $37.99.

Rent-A-Center leases household durable goods to customers on a rent-to-own basis. It offers products such as consumer electronics, appliances, and computers.

The Plano, Texas-based company posted quarterly net income of $27.6 million or $0.51 per share, compared with $40 million or $0.67 per share last year.

On average, 10 analysts polled by Thomson Reuters expected earnings of $0.65 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter climbed 2.1 percent to $755 million from $739 million a year ago, but missed analysts' expectations of $773.68 million.

On a same-store basis, sales for the quarter fell 0.8 percent.

Continued electronic product deflation, coupled with promotional activity led to lower revenue per agreement or ticket in the core US segment, the company said.

Results were offset by operating expenses that climbed to $473 million from $451 million in the prior year.

For fiscal 2013, Rent-A-Center now expect earnings of $2.80 to $2.85 per share, down from prior range of $3.03 to $3.15 per share. Analysts expect earnings of $3.11 per share.

The company now expects revenue growth of 1 percent, from prior guidance of 3 percent. Analysts expect growth of 2.7 percent.

The company's stock closed Monday at $37.99, down $0.09 or 0.24%, on a volume of 232 thousand shares.