Rent-A-Center Q4 Profit Down; Shares Tank 13%

(RTTNews) - Rent-A-Center Inc. (RCII) Monday reported a sharp drop in profit for the fourth quarter, hurt largely by weak income at its core U.S. segment and higher operating expenses.

The rent-to-own home appliances retailer's fourth-quarter profit plunged to $13.1 million or $0.25 per share from $47.2 million or $0.80 per share last year.

On average, seven analysts polled by Thomson Reuters expected the company to earn $0.75 per share for the quarter. Analysts' estimates typically exclude special items.

Rent-A-Center's fourth-quarter revenues grew 1.5 percent to $769.6 million from $758.4 million last year. Six analysts had a consensus revenues estimate of $787.95 million for the quarter.

Revenue growth was driven largely by strong performance at Acceptance Now segment and the International segment. However, revenues from the company's core U.S. segment declined to $609.9 million from $638.7 million a year ago.

Plano, Texas-based 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.

Same store sales for the quarter declined 1.1 percent, primarily attributable to a 5.5 percent decrease in the Core U.S. Segment.

"We continue to face meaningful headwinds in our domestic U.S. rent-to-own business, including a customer under severe economic pressure and an intensified promotional environment. These conditions significantly impacted our Core U.S. segment customer agreement growth in December, which was the most challenging in years," Chief Executive Mark Speese said.

Operating costs for the period rose to $504.4 million from $448.2 million last year.

Looking ahead, the company projects full-year 2014 earnings of $2.30 to $2.50 per share and revenue growth of 4.5 percent to 7.5 percent.

Analysts currently expect full-year earnings of $3.20 per share and revenue growth of 6.70 percent.

RCII closed Monday's trading at $31.22, up $0.19 or 0.61%, on the Nasdaq. The stock however plunged $4.07 or 13.04% in after-hours trade.