ATLANTA-Increased expenses and a one-time charge for an investigation into its business practices drove Aaron’s net income down 26 percent in its fiscal third quarter, to $21.1 million.
Selling, general and administrative expenses were up 8.8 percent in dollars and 306 basis points as a percentage of sales, to 47.9 percent. The one-time charge totaled $13.4 million, and was due to a pending regulatory investigation by the California attorney general into Aaron’s leasing, marketing and privacy practices.
For the quarter, which ended on Sept. 30, Aaron’s total revenues were $539.5 million, up 1.9 percent from last year’s third quarter and including a 0.5 percent gain in same-store revenue. Gross margin rose 60 basis points to 84.7 percent.
Ronald Allen, chairman, president and CEO, said the quarter did not meet the company’s expectations. “Both same-store revenue and customer growth in company-operated stores were below plan, as our low- to middle-income customers continue to be adversely affected by the present economic environment,” Allen said.
Allen noted that revenue and customer growth did increase for Aaron’s franchised stores, “and we believe this is an indication of existing customer demand. We remain optimistic on the prospects of Aaron’s and expect that 2014 will show an improvement over 2013’s performance as we move towards our more historical growth rates in future years.”