Aaron's (AAN) Posts Wider Q1 Loss, Misses Sales Estimates

Core Viewpoint - The Aaron's Company, Inc. reported a wider-than-expected loss per share in Q1 2024, with revenues declining year over year and missing consensus estimates [1][2]. Revenue Performance - Consolidated revenues fell 7.7% to $511.5 million, missing the Zacks Consensus Estimate of $517 million, driven by declines in lease revenues and retail sales [1][3]. - Lease revenues and fees decreased 7.4% year over year to $346 million, while retail sales dropped 9% to $136.9 million [3][4]. - Non-retail sales declined 5.4% to $22.6 million, and franchise royalties and other revenues decreased 2.8% to $5.9 million [3]. Segment Analysis - In the Aaron's business segment, revenues declined 7.5% year over year to $381.1 million, attributed to a 4.8% decrease in lease portfolio size and a 110 basis point drop in lease renewal rate to 87.4% [3][4]. - BrandsMart segment revenues decreased 8.1% to $132.5 million, primarily due to a 9.4% decline in comparable sales [4][5]. Profitability Metrics - Gross profit declined 7.48% year over year to $273.9 million, with gross margin expanding 20 basis points to 53.5% [6]. - Adjusted EBITDA fell 50.4% year over year to $22.7 million, with the adjusted EBITDA margin declining 390 basis points to 4.4% [6]. Financial Position - At the end of Q1 2024, the company had cash and cash equivalents of $41 million, total debt of $212.9 million, and shareholders' equity of $670.5 million [7]. - The company generated a negative adjusted free cash flow of $33.2 million and used $18.5 million of cash from operating activities [7]. Outlook - For 2024, the company anticipates revenues between $2.055 billion and $2.155 billion, with adjusted EBITDA projected at $105 million to $125 million [8]. - The adjusted bottom line is expected to range from break-even to earnings of 25 cents per share, while GAAP losses are anticipated to be between 25 and 40 cents per share [8].