Rent-A-Center Inc. said that its fourth-quarter net income rose nearly 55 percent as its revenue improved and it wasn't weighed down by heavy costs of the prior year.
The company, based in Plano, Texas, operates more than 3,000 stores across North America where customers can rent furniture, electronics and other home items with the potential of ownership at the end of their contract. It also operates 750 RAC Acceptance locations, which allows customers to shop under its financing methods at traditional retailers, in the U.S.
Rent-A-Center reported after the market closed Monday that it earned $49.3 million, or 83 cents per share, for the quarter that ended Dec. 31. That's up from $31.9 million, or 49 cents per share, in the same quarter last year.
After adjusting for a restructuring charge, costs for discontinuing its financial services business and other special items, it earned 85 cents per share versus 71 cents per share in the last year.
The company's total revenue rose nearly 9 percent to $737.5 million from $677.1 million, driven by the growth of its RAC Acceptance business, which was partially offset by the discontinuation of its financial services business.
Revenue from its stores open at least a year, a key indicator of a retailer's financial performance as it strips away the impact of recently opened or closed stores, increased 2.7 percent.
Analysts polled by FactSet anticipated the company would earn 82 cents per share on revenue of $741.6 million.
Rent-A-Center CEO Mark E. Speese said that demand remained strong during the period but business was tempered by its core customers keeping a close eye on their spending.
The company also reported that it earned $164.6 million, or $2.66 per share, for the full year versus $171.6 million, or $2.60 per share, last year. Its revenue increased to $2.9 million from $2.7 million last year.
Rent-A-Center said that it expects to earn $3.00 to $3.20 for the full year, including a 20-cents-per-share cost for its international expansion efforts. It also projected that its revenue would grow 7 to 10 percent, which would mean revenue of roughly $3.1 to $3.2 million. Analysts forecast the company would earn $3.22 per share on revenue of $3.1 million for the year.
The company's shares closed regular trading at $37.19 and fell $2.17, almost 6 percent, to $35.02 in after-hours trading following the release of the earnings report.