Aaron's Shares Sink as Rental Chain Cuts Earnings Forecastby
Aaron’s Inc. shares fell the most in more than two decades after the furniture-rental chain cut its earnings forecast, following a similar plunge by rival Rent-a-Center Inc. earlier this week.
The retailer, which provides furniture and electronics on a rent-to-own basis, said on Friday that it expects earnings of $2.02 to $2.22 a share this year, excluding some items. Aaron’s had previously projected as much as $2.36. Third-quarter sales and profit also missed analysts’ estimates.
Aaron’s has struggled with slowing store traffic and difficulty getting customers to pay their debts, part of a broader slump in the rent-to-own industry. Aaron’s same-store sales fell 4.1 percent, a worse decline than the 3.6 percent analysts had estimated. On Tuesday, Rent-A-Center shares tumbled 30 percent after that company cut the upper end of its annual earnings forecast to $2.10 from $2.20.
Shares of Atlanta-based Aaron’s sank 26 percent to $24.67 on Friday, the worst decline since at least November 1992. Before the tumble, Aaron’s stock had been up 9.7 percent year-to-date.
The industry’s slowdown has driven speculation about consolidation. In April, Reuters reported that Rent-A-Center has repeatedly approached Aaron’s as a takeover target, which Aaron’s rejected.