Rent-A-Center (RCII) warns of profit miss

Rent-A-Center Inc. RCII, -29.27% said Tuesday it expects third-quarter earnings per share, on both a GAAP and adjusted basis, of 5 cents to 15 cents. That's well below the FactSet EPS consensus of 39 cents. U.S. same-store sales are expected to be down about 12%.

  

Rent-A-Center sees Q3 EPS well below consensus with core US comps down 12%; cites performance issues and outages related to new POS system:

Co sees Q3 EPS $0.05-0.15 vs $0.39 Capital IQ Consensus Estimate.

• The Company estimates Core U.S. same storesales for the three months ended September 30, 2016 to be down ~12%, and Acceptance Now same store sales to be essentially flat.
• Core U.S. gross profit, as a percent of total revenue, is estimated to be flat compared to the third quarter of last year as ongoing benefits from the changes made to the Company's sourcing model were offset by a third-quarter clearance event focused on previously-rented product.
• "Following the implementation of our new point-of-sale system, we experienced system performance issues and outages that resulted in a larger than expected negative impact on Core sales," said Robert D. Davis, Chief Executive Officer of Rent-A-Center, Inc. "While we expect it to take several quarters to fully recover from the impact to the Core portfolio, system performance has improved dramatically and we have started to see early indicators of collections improvement."
• The Company recently obtained an amendment to its credit agreement which reduces the minimum Consolidated Fixed Charge Coverage Ratio from 1.75 to 1.00 to 1.50 to 1.00, beginning with the quarter ended September 30, 2016. Co will report on Oct 26.