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(Updates share price in third paragraph.)
Feb. 10 (Bloomberg) -- Aaron’s Inc. Chairman R. Charles Loudermilk Sr., who founded the rent-to-own furniture chain, said he is considering selling his shares and would support a sale of the company at the right price.
There have been queries from interested buyers and such overtures have increased in recent months, Loudermilk, who is 84 years old and holds 6.5 percent of outstanding shares, said yesterday in an interview.
Aaron’s slid 2.8 percent to $27.96 at 4 p.m. New York time after jumping as much as 11 percent earlier, the most since April. Aaron’s “is not interviewing investment banks,” Chief Financial Officer Gilbert Danielson said yesterday in a statement in response to a query.
Loudermilk founded Aaron’s in 1955, and it now has more than 1,800 company-operated and franchised stores in the U.S. and Canada. Its market capitalization was $2.2 billion as of yesterday.
His son Robert C. “Robin” Loudermilk stepped down as chief executive officer and president of the company for personal health reasons in November, and no other family members are involved in the business. The company’s interim CEO is Ron Allen, a member of Aaron’s board of directors since 1997 and the former CEO of Delta Air Lines Inc.
“Although we haven’t grown recently like I like, we still have grown and we’re still very profitable,” the senior Loudermilk said today on an earnings conference call.
“Since my son is out of the business and I’m 84, I would look at the company differently as to the maintaining of the stock,” Loudermilk said.
He added that he doesn’t have immediate plans to sell “a large amount of stock right now” and that “the future of the company is very, very bright.” Danielson said today that the senior Loudermilk was referring only to his own shares, and that Aaron’s management is focused on the long term.
Asked by analysts whether Aaron’s would repurchase Loudermilk’s shares should he decide to sell, Allen said the company has some buyback authorization remaining under a current repurchase plan and has “cash resources to buy more back” if it chose to.
Loudermilk didn’t comment on today’s call about whether there is interest from possible buyers beyond saying, “If a sizeable offer comes in, it’s my obligation to take it to the board.”
Loudermilk had for years owned a controlling voting interest in Aaron’s and held more than 60 percent of the company’s Class A stock as recently as 2010.
In December 2010, the company converted common shares into A shares and renamed the A shares as common stock. By January 2011, Loudermilk’s stake was 8.8 percent of common stock, or 7.03 million shares. He has since sold about a third of it to reduce his stake to 4.89 million shares as of his most recent regulatory filing dated July 2011.
Aaron’s reported adjusted fourth-quarter earnings yesterday of 43 cents a share, which matched the average of six analysts’ estimates compiled by Bloomberg. Full-year net income was $113.8 million on revenue of $2.02 billion. The company forecast 2012 revenue of $2.15 billion and reaffirmed its guidance for earnings of $1.88 to $2.04 a share
Loudermilk, who was raised in a shotgun-style house in Atlanta and grew up wearing unclaimed clothes from his uncle’s dry-cleaning business, set Aaron’s apart from other rent-to-own chains by not requiring a credit check, offering payment plans ranging from 6 to 24 months and allowing customers to return furniture at any time.
Aaron’s offers goods ranging from computers to refrigerators and sofas, and has an auto-tire and wheel unit called Rimco. Competitors include Rent-A-Center Inc., which owns and operates more than 3,000 stores.
In 2008, Warren Buffett’s Berkshire Hathaway Inc.’s Cort Business Services unit bought Aaron’s corporate furniture division for $72 million in cash. Loudermilk said he initially approached Buffett about buying Cort from Berkshire but Buffett declined to sell.
--With assistance from Jeffrey McCracken in New York. Editors: Anita Sharpe, Elizabeth Wollman
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