Rent-A-Center 2Q profit drops 5 percent

Rent-A-Center 2Q profit drops 5 pct as costs rise, key sales figure drops; but raises outlook

Associated Press

PLANO, Texas. (AP) -- Rent-A-Center on Monday said that net income in the second quarter fell 5 percent as costs rose and a key sales measure dropped.

The company, which leases furniture and appliances with an option to buy, reported second-quarter profit of $42 million for the three months ending June 30. That's down from $44.2 million in the same period in 2012, as expenses for salaries and other costs climbed.

But on a per-share basis, the company's earnings rose to 76 cents from 74 cents, beating Wall Street expectations by a penny. The company has been buying back its own stock, which boosts per-share profit. That's why Rent-A-Center raised its outlook for earnings per share for the year on Monday.

In the first six months of this year, Rent-A-Center spent $217 million to buy back 5 million shares.

Revenue rose about 1 percent, to $761 million from $750 million. Analysts expected $778 million, according to the data provider FactSet.

Shares in Rent-A-Center fell $1.09, or 2.8 percent, to $37.50 in after-hours trading. They ended the regular trading day at $38.59, up 12 percent this year.

In the most recent quarter, rentals and installment sales rose, while merchandise sales dropped. Revenue at stores open at least a year — a key metric in the retail business — fell 1.6 percent on weakness in the U.S. division. International stores did better.

It expects revenue in stores open at least a year to be flat or grow up to 1 percent for the year, with the U.S. business returning to growth in the fourth quarter.

The company also raised its earnings outlook for 2013 to a range of $3.03 and $3.15 per share, getting a boost from stock repurchases. In April, it estimated earnings per share between $2.95 and $3.10 for the year.

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