Aaron's (AAN) Q4 Loss Wider, Revenues Decline 10.2% Y/Y

Core Viewpoint - The Aaron's Company, Inc. reported a wider loss per share in Q4 2023, with revenues declining year-over-year and missing consensus estimates [1][2]. Financial Performance - Adjusted loss per share was 26 cents, compared to a consensus estimate of earnings of 3 cents per share, and earnings of 9 cents per share in the same quarter last year [1]. - Consolidated revenues fell 10.2% to $529.5 million, missing the Zacks Consensus Estimate of $543 million [2]. - Lease revenues and fees decreased 8.3% year-over-year to $331.2 million, while retail sales dropped 14% to $166.4 million [2][3]. - Non-retail sales declined 9.3% to $26.4 million, and franchise royalties and other revenues decreased 6.8% to $5.5 million [2]. Segment Analysis - Revenues from the Aaron's business segment declined 8.7% year-over-year to $369.2 million, attributed to a weak lease portfolio and lower renewal rates [3]. - E-commerce revenues in the Aaron's segment increased 10.4% year-over-year, accounting for 20.6% of lease revenues [3]. - BrandsMart segment revenues decreased 12.6% to $164 million, with e-commerce product sales representing 9.8% of total product sales [3]. Margins and Profitability - Gross profit declined 5.8% to $269.4 million, while gross margin expanded by 130 basis points to 62.8% [4]. - Operating profit was $14.8 million, down from $17 million in the previous year [4]. - Adjusted EBITDA fell 6.6% year-over-year to $33.8 million, with an adjusted EBITDA margin increasing by 20 basis points to 9.1% [4]. Financial Position - The company ended the quarter with cash and cash equivalents of $59 million, total debt of $194 million, and shareholders' equity of $686.1 million [5]. - Adjusted free cash flow for 2023 was $102.3 million, with capital expenditure at $94.4 million [5]. - For 2024, capital expenditure is expected to be between $85 million and $95 million, with projected adjusted free cash flow of $15 million to $30 million [5]. Outlook - For 2024, the company anticipates revenues between $2.06 billion and $2.16 billion, with adjusted EBITDA projected at $105 million to $125 million [6]. - The expected loss per share ranges from 10 cents to earnings of 25 cents, with a reported loss anticipated between 5 cents and 30 cents per share [6]. - Revenues for the Aaron's business are expected to be between $1.46 billion and $1.52 billion, while BrandsMart revenues are anticipated to be between $610 million and $650 million [6].