Aaron's (AAN) to Report Q2 Earnings: Can it Beat Estimates?

Core Viewpoint - The Aaron's Company, Inc. is expected to report declines in both revenue and earnings for the second quarter of 2024, with revenues estimated at $510 million, a decrease of 3.9$510 million, indicating a decline of 3.9% from the prior year's figure [1] - The consensus estimate for quarterly earnings is 3 cents per share, suggesting a significant drop of 92.3% from 39 cents per share reported in the same quarter last year [1] - The company experienced a negative earnings surprise of 87.5% in the last reported quarter and an average earnings miss of 255.2% over the trailing four quarters [1] Group 2: Market Challenges - Aaron's is facing challenges from sluggish demand for discretionary products, leading to lower overall sales trends [2] - The company's revenues have been impacted by lower lease renewal rates due to an increasing mix of e-commerce agreements [2] - Retail sales at BrandsMart are expected to be affected by soft customer traffic and a shift towards lower-priced products [2] Group 3: Operating Costs and Strategic Initiatives - Elevated operating costs, driven by increased advertising investments and higher provisions for lease merchandise write-offs, are negatively impacting the bottom line and adjusted EBITDA [3] - The company is enhancing its e-commerce platform by offering flexible payment options, maintaining low prices, and expanding product variety [3] - Investments in digital marketing and improvements in the shopping experience, including same-day and next-day delivery, are expected to contribute positively to top-line performance [3] Group 4: Omnichannel Strategy and Customer Acquisition - The new omnichannel lease decisioning and customer acquisition program is driving higher conversion rates of lease applications, which is expected to bolster the total lease portfolio size [4] - The market optimization strategy, including GenNext stores and showroom programs, is improving in-store customer experience and enhancing the operating model [4] - Benefits from these initiatives are likely to provide some relief to the company's performance amid ongoing challenges [4] Group 5: Earnings Predictions - The current model does not predict an earnings beat for Aaron's, with an Earnings ESP of -171.43% and a Zacks Rank of 3 [5]