ATLANTA-Net income for home furnishings retailer and leaser Aaron’s totaled $25.9 million in its fiscal second quarter, down 28.7 percent from the second quarter of a year ago.
Declines in sales along with an uptick in expenses were the primary culprits. Net sales from both retail and non-retail operations in the quarter, which ended on June 30, were down 8.7 percent to $95.7 million. Total revenue, which includes lease revenues and fees, along with franchise royalties and fees, was up 2.5 percent to $552.1 million.
Ronald Allen, Aaron’s chairman, president and CEO, said the company was expecting better revenue performance and customer growth in the quarter, but the company’s numbers were hurt by the continuation of the financial headwinds and laggard economy seen in the first quarter. “Shipments of products to our franchisees again were below last year’s numbers, as customers of our franchised stores are experiencing similar economic challenges,” Allen said.
Operating expenses rose 6 percent in dollars and 153 basis points as a percentage of sales. Gross margin improved by 47 basis points to 11.5 percent.
Looking ahead, Allen said the trends that beset the second quarter are expected to continue in the near term, but that the outlook over the long term is more optimistic. “We are planning several new promotions for the remainder of the year to stimulate growth in revenue and customers,” he said.
Based on the second quarter, Aaron’s has projected that full-year revenue will total about $2.3 billion, less than its previous guidance of about $2.35 billion.