Why Is Aaron's (AAN) Down 0.6% Since Last Earnings Report?

Core Viewpoint - Aaron's Company, Inc. reported a loss in Q2 2024, with revenues declining in both segments, missing consensus estimates and showing year-over-year declines [2][4]. Financial Performance - The adjusted loss per share was 7 cents, missing the Zacks Consensus Estimate of earnings of 3 cents, compared to adjusted earnings of 39 cents per share in the same quarter last year [2]. - Consolidated revenues decreased by 5.1% to $503.1 million, falling short of the Zacks Consensus Estimate of $510 million [2]. - Lease revenues and fees dropped 5.1% year over year to $335.7 million, while retail sales fell 5.7% to $139.5 million [3]. - Non-retail sales decreased by 3.1% to $22.1 million, but franchise royalties and other revenues increased by 1.7% to $5.9 million [3]. - E-commerce recurring revenues grew significantly by 79.4% due to new omnichannel lease decisions and customer acquisition programs [3]. Segment Analysis - In the Aaron's business segment, revenues declined by 5% year over year to $369.4 million, attributed to a 2% decrease in lease portfolio size and a 140 basis points drop in lease renewal rate to 86.8% [4]. - The BrandsMart segment saw revenues decrease by 5.8% to $135.4 million, primarily due to a 7.3% decline in comparable sales linked to reduced customer traffic [4]. Margins and EBITDA - Gross profit fell by 3.6% year over year to $272 million, while gross margin expanded by 90 basis points to 54.1% [5]. - The company reported an operating loss of $12.3 million compared to an operating profit of $11.3 million in the previous year [5]. - Adjusted EBITDA declined by 42.2% year over year to $24.5 million, with the adjusted EBITDA margin decreasing by 310 basis points to 4.9% [5]. Financial Position - Aaron's has agreed to be acquired by IQVentures for $10.10 per share, with an enterprise value of approximately $504 million [6]. - The company ended the quarter with cash and cash equivalents of $34.2 million, net debt of $181.6 million, and shareholders' equity of $657.7 million [6]. - In the first half of 2024, it utilized $6.9 million of cash from operating activities and reported a negative adjusted free cash flow of $39.2 million [6]. Dividend and Future Outlook - The company paid out dividends of $3.8 million in Q2 and declared a regular quarterly cash dividend of 12.5 cents per share, payable on October 3, 2024 [7]. - Due to the pending acquisition by IQVentures, Aaron's has withdrawn its 2024 guidance [7]. - Estimates for the company have trended downward, with a consensus estimate shift of -16.13% [8][10]. Industry Comparison - Aaron's is part of the Zacks Consumer Services - Miscellaneous industry, where Cimpress (CMPR) reported a revenue increase of 5.6% year over year [11]. - Cimpress is expected to post earnings of $0.30 per share for the current quarter, reflecting a year-over-year change of +76.5% [11].