US' The Aaron's Company posts $610.4 mn revenue in Q2 FY22

The lower lease revenues were primarily attributable to lower lease renewal rates and lower exercise of early purchase options. At the end of the second quarter of 2022, overall lease portfolio size was $130.8 million, a decrease of 1.5 per cent compared to the end of the second quarter of 2021. The lease renewal rate for the second quarter of 2022 was 88.5 per cent, compared to 92.4 per cent in the government stimulus-aided second quarter of 2021. E-commerce revenues increased 4.0 per cent in the second quarter of 2022 compared to the same period in 2021 and represented 15.4 per cent of lease revenues.

Net losses were $5.3 million for the second quarter of 2022 compared with net earnings of $33.0 million in the prior year period. Net losses for the second quarter of 2022 include the effects of a one-time, non-cash charge for a fair value adjustment to merchandise inventories of $23.0 million, BrandsMart acquisition-related costs of $8.0 million, restructuring charges of $5.6 million, acquisition-related intangible amortisation expense of $2.8 million, and separation costs of $0.2 million. These charges were partially offset by 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. Net earnings in the second quarter of 2021 included restructuring charges of $1.8 million and separation costs of $1.2 million, the company said in a press release.

"With the acquisition of BrandsMart USA, consolidated revenues increased in the second quarter, and we are encouraged by the performance of this new business segment," said Douglas Lindsay, chief executive officer of The Aaron's Company, Inc. "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 centralised 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 programme, and the value creation opportunities available through the BrandsMart acquisition," Lindsay added. "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."

Adjusted EBITDA was $48.1 million in the second quarter of 2022, a decrease of 26.4 per cent compared to the second quarter of 2021. As a percentage of total consolidated revenues, adjusted EBITDA was 7.9 per cent in the second quarter of 2022 compared with 14.0 per cent in the prior year second quarter. The declines in adjusted EBITDA and adjusted EBITDA margin were primarily due to lower lease renewal rates, higher provision for lease merchandise write-offs, and higher other operating expenses, partially offset by lower personnel costs in Aaron's Business. The decline in adjusted EBITDA was also offset by $10.5 million of adjusted EBITDA generated from the BrandsMart acquisition.

Total revenues for BrandsMart were $181.4 million in the second quarter of 2022. Losses before income taxes for the second quarter of 2022 were $15.9 million. Losses before income taxes in the second quarter of 2022 include a one-time $23.0 million non-cash charge related to a fair value adjustment of the acquired merchandise inventories. Adjusted EBITDA was $10.5 million in the second quarter, and as a percentage of total revenues for the BrandsMart segment, adjusted EBITDA was 5.8 per cent.

The company has updated its full year 2022 outlook to reflect expectations that continued high inflation and related macroeconomic factors will adversely impact customer demand, lease portfolio size, lease renewal rates, the provision for lease merchandise write-offs, and company expenses. For the full year 2022, the company now expects consolidated total revenues between $2.19 billion and $2.27 billion, adjusted EBITDA between $150.0 million and $170.0 million, and non-GAAP earnings per share between $1.75 and $2.15.

Fibre2Fashion News Desk (RR)