Home Aaron’s Beats Q2 Expectations With Help From BrandsMart
July 26, 2022

Aaron’s Beats Q2 Expectations With Help From BrandsMart

Posted In: Retail Articles


The Aaron’s Co., an omnichannel provider of lease-to-own and retail purchase operations posted second-quarter financials that are the first that incorporate results from BrandsMart U.S.A., acquired April 1.

Aaron’s net loss was $5.3 million, or 17 cents per diluted share for the second quarter, the company reported, versus net earnings of $33 million, or 95 cents per diluted share, in the year-earlier period. Adjusted for one-time events, net earnings were $24.8 million, or 79 cents per diluted share, versus $36.3 million, or $1.05 per diluted share, in the year-prior period.

Aaron’s topped a MarketBeat-published analyst consensus estimate for adjusted diluted earnings per share, at 64 cents, and revenue, at $604.7 million

Net loss for the second quarter included a non-cash charge for a fair value adjustment to merchandise inventories of $23 million, BrandsMart acquisition-related costs of $8 million, restructuring charges of $5.6 million, acquisition-related intangible amortization expense of $2.8 million and separation costs of $200,000. A net tax benefit of $4.8 million related to a remeasurement of the company’s deferred state tax balances in conjunction with the BrandsMart acquisition partially offset the charges, Aaron’s maintained.

Net earnings in the 2021 second quarter included restructuring charges of $1.8 million and separation costs of $1.2 million, the company added.

Total revenues were $610.4 million in the second quarter, Aaron’s noted, compared with $467.5 million for the 2021 period.

In the Aaron’s business segment, comparable sales decreased 6.7% during the quarter year over year, primarily driven by a lower lease renewal rate, lower exercise of early purchase options and a reduction in retail sales, partially offset by a larger average same-store lease portfolio size during the period. Total revenues were $430.2 million down 8% versus the 2021 quarter.

“With the acquisition of BrandsMart U.S.A., consolidated revenues increased in the second quarter, and we are encouraged by the performance of this new business segment,” said Douglas Lindsay, Aaron’s CEO, in announcing the financial results. “In the Aaron’s business, customer demand and payment activity progressively worsened through the quarter as high inflation impacted the lower-income consumer. In response to these challenging market conditions, we are leveraging our centralized lease decisioning and digital servicing platforms to maintain relationships with our customers and strengthening actions to control costs. We continue to strategically invest in our growing e-commerce channel, our high-performing GenNext store program, and the value creation opportunities available through the BrandsMart acquisition. Together with our strong balance sheet and liquidity, we believe these investments enable us to continue delivering a market leading value proposition to a large and increasingly diversified customer base that will expand our market share and position us for future growth.”

BrandsMart U.S.A. is an appliance retailer with 10 stores in Florida and Georgia. Its total revenues for the second quarter were $181.4 million.

In the quarter, Aaron’s opened 36 GenNext stores, bringing the total to 171 GenNext, or 16.1% of total company-operated namesake retail locations.

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