Rent-A-Center Stock Drops On Weak Q2 Guidance - Update

(RTTNews) - Rent-A-Center Inc (RCII), the rent-to-own home appliances retailer, Thursday detailed some weak earnings and revenue outlook for the second quarter, as soft macro economic trends hurt demand in the U.S. segments.

Investors were none too impressed and sent Rent-A-Center shares plunging 10 percent in after-hours trade on the Nasdaq.

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. But some soft economic conditions hurt demand at its U.S. business.

The Plano, Texas-based company projects second-quarter net earnings of $0.31 to $0.33 per share and adjusted earnings of $0.36 to $0.38 per share. On average, eight analysts polled by Thomson Reuters currently expect earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude one-time items.

The company's net earnings guidance for the quarter include restructuring expense of about $0.05 per share related to the consolidation of about 150 stores.

Rent-A-Center projects second-quarter revenues of $773 million, while analysts currently expect revenue of $786.4 million.

The company estimates same store sales for the quarter to climb about 0.6 percent.

To spur demand, the company announced a new product line in its domestic retail stores with a foray into the smartphone business, whereby consumers nationwide can shop for branded smartphones and no-contract plans.

The company is set to report full financial results for the second quarter on July 21.

RCII closed Thursday at $29.06, down $0.47 or 1.59%, on a volume of 446k shares. In after hours, the stock tanked $2.86 or 9.84%.