Aaron's Net Falls 56 Percent in Q3
ATLANTA-Declining margins and rising costs, offsetting a major gain in revenues, drove a 56 percent drop in Aaron's (NYSE: AAN) third-quarter net income, to $9.3 million.
Operating expenses in the quarter, which ended on Sept. 30, jumped 28.7 percent in dollars, although as a percentage of revenues expenses were down 109 basis points to 47.3 percent. Gross margin fell 361 basis points to 52.3 percent.
Total revenues in the quarter were $707.6 million, gaining 31.7 percent. The top-line total included $189.8 million in revenues from Progressive, the provider of virtual lease-to-own programs that Aaron's acquired in April. Same-store revenues fell 2.8 percent and customer count on a same-store basis was off 3.9 percent.
Gilbert Danielson, chief financial officer and interim CEO, said Aaron's is making "significant progress" in its strategic initiatives to strengthen its core business. "Improving the customer's experience is a priority," Danielson said, "and through meeting their needs in all areas of our operations, including e-commerce and the personal relationship at Aaron's stores, we believe our overall customer reach will expand."
Looking ahead, Aaron's said it expects fourth-quarter revenues to reach about $740 million, including revenues of an estimated $205 million from Progressive. Revenues for the full fiscal year are projected to total about $2.71 billion, which are expected to include about $534 million from Progressive.