Rent-A-Center Profit Slips

Earnings hit targets, though.
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Rent-A-Center

(RCII) - Get Report

said its first-quarter earnings fell 15.4% as operating costs and stock option expenses rose.

The company earned $40.3 million, or 57 cents a share, in the quarter, compared with $47.7 million, or 63 cents a share, a year ago. Analysts surveyed by Thomson First Call were expecting earnings of 50 cents a share in the most recent quarter.

First-quarter revenue rose marginally from a year ago to $607 million as against analysts' expectation of $599.8 million.

The Plano, Texas-based company said the rise in revene was because of 1.8% increase in same store sales plus an increase in incremental revenues generated in new and acquired stores. However, the rise was offset by an overall lower average store base as a result of its store restructuring plan as well as stores closed due to hurricane damage.

The company cautioned that rising fuel prices could hurt consumer demand and operating costs.

The company expects to earn 50 cents to 54 cents a share in the second quarter, on revenue of $578 million to $586 million, as against analysts' expectation of 52 cents a share, on revenue of $576.8 million.

For the full year, the company forecasts earnings of $2 to $2.10 a share, on revenue of $2.34 billion to $2.37 billion, as against analysts' expectation of $2.02 a share, on revenue of $2.35 billion. It also expects to open 60 to 80 new stores.

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