Rent-A-Center Q1 Profit Down - Update

(RTTNews) - Rent-A-Center Inc. (RCII) Monday reported a significant decline in first-quarter profit, due mainly to some weak performance at its Core U.S. segment as well as on increased operating costs.

Plano, Texas-based Rent-A-Center's first-quarter profit dropped to $28.9 million or $0.54 per share from $46.1 million or $0.79 per share last year.

Adjusted earnings were $0.57 per share for the quarter. On average, seven analysts polled by Thomson Reuters expected earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items.

The rent-to-own home appliances retailer's revenues for the first quarter increased to $833.7 million from $819.3 million last year. Six analysts on consensus expected revenues of $840.31 million for the period.

Revenue growth of 1.8 percent was driven largely by strong performance at Acceptance Now segment, partially offset by poor performance at its Core U.S. unit, where revenues declined to $634.8 million from $672.4 million a year ago.

Same store sales for the quarter declined 0.8 percent compared to last year, primarily attributable to a 6.1 percent decrease in the Core U.S. segment.

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.

Chief Executive Robert Davis said, "We remain aware of continued challenges in the macro-economic environment but our focus remains on the execution of the strategy communicated in our February investor day to build shareholder value."

Operating costs rose to $503.1 million from $471.9 million a year ago.

Moving ahead, the company maintained its full-year 2014 earnings outlook of $2.30 to $2.50 per share, but lowered its revenue growth outlook to 3 to 6 percent from prior estimate of 4.5 percent to 7.5 percent.

Analysts currently estimate full-year earnings of $2.29 per share on revenue growth of 4.8 percent.

RCII closed Monday's trading at $25.77, down $0.36 or 1.38%, on the Nasdaq.