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In a strategic move to focus on its key business segments, the leading rent-to-own operator, Aaron’s Inc. (AAN - Snapshot Report) has sold out all assets of its RIMCO operations to its competitor, Rent-A-Wheel /Rent-A-Tire for an undisclosed amount. RIMCO and Rent-A-Wheel /Rent-A-Tire engage in selling of leasing of automobiles, tires and rims through their stores.

RIMCO was a small business unit of Aaron’s that generated annual revenue of approximately $20 million from its 32 stores in 11 states. The sale of the asset will enable Aaron’s to focus on improvising the performance of its namesake and HomeSmart stores.

Aaron’s has been witnessing soft top and bottom-line performances for the last several quarters. Last week, this Atlanta-based rent-to-own operator lowered its fourth-quarter and full-year 2013 guidance based on lower-than-expected revenues and limited customer growth in the fourth quarter.

The company trimmed its fourth-quarter revenue expectation to $555 million from $575 million projected earlier. For 2013, Aaron’s now anticipates revenues of $2.24 billion, down from its earlier guidance of $2.26 billion.

The downward revision was primarily due to the prevalent sluggish economic environment. The company’s comparable sales and customer growth fell 1% year over year in the fourth quarter. Moreover, shipments of franchised products declined from the year-ago comparable quarter.

The company believes that the current business environment will not change significantly in the near term. Looking at the current business scenario, Aaron’s now intends to slow down the pace of opening namesake and HomeSmart stores and expects net new store growth to remain under 4% in 2013.

Considering the above-mentioned factors, the company lowered its earnings guidance range for the fourth quarter and 2013. The company now projects earnings between 27 cents and 31 cents per share, down from its previous guidance range of 38–42 cents. The current Zacks Consensus Estimate is pegged at 29 cents per share.

Similarly, for 2013, GAAP earnings are anticipated to come in the range of $1.56–$1.60 per share versus $1.67–$1.71 guided earlier. On a non-GAAP basis, excluding the regulatory investigation as well as retirement and vacation related charges accrued in the third quarter, earnings are expected to come in the range of $1.84 to $1.88 per share, down from previous projection of $1.95 to $1.99. Currently, the Zacks Consensus Estimate stands at $1.86 per share.

Most retailers reported lackluster results for the holiday shopping period this year, followed by trimmed forecasts, as retailers suffered from lower traffic, an intensified promotional environment, lesser shopping days between Thanksgiving and Christmas, ice storms and sluggish consumer spending. Retailers that lowered their guidance battered by the holiday results include Family Dollar Stores Inc. (FDO - Analyst Report), American Eagle Outfitters Inc. (AEO - Analyst Report) and L Brands Inc. (LB - Analyst Report).

Currently, Aaron’s carries a Zacks Rank #5 (Strong Sell).

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