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Aaron's (AAN) BrandsMart Buyout to Boost Sales & Customer Base

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The Aaron's Company, Inc. (AAN - Free Report) is benefiting from its robust lease-to-own portfolio, a solid e-commerce business and a sturdy performance in the GenNext stores. Recently, management cited that AAN concluded its earlier-announced buyout of BrandsMart U.S.A. (BrandsMart), a renowned appliance and consumer electronics retailer. Aaron’s acquired BrandsMart for $230 million in cash.

This buyout facilitates Aaron’s offer its customers high-quality furniture, appliances, electronics and other home goods on affordable lease and retail purchase options. This will strengthen AAN’s market position and help expand the customer base.

Management highlighted that the consolidated business will generate solid revenues and a double-digit annual adjusted EBITDA growth in five years and beyond. With respect to the completion of the BrandsMart buyout, Aaron's replaced the $250-million unsecured revolving credit facility with a new one. The latest credit facility comprises an unsecured $375 million revolving credit facility and a five-year $175 million unsecured term loan.

On Feb 23, Aaron’s informed that it inked a deal to buy BrandsMart. Management had then anticipated total annual revenues of more than $3 billion and an adjusted EBITDA of above $300 million from this transaction by 2026. Founded in 1977, BrandsMart delivered revenues of $757 million and an adjusted EBITDA of $46 million during the 12 months ended Dec 25, 2021.

What’s More?

Aaron’s is consistently witnessing strength in its e-commerce platform even after stores reopened. In fourth-quarter 2021, e-commerce lease revenues were up 13%, accounting for 14.6% of the total revenues. The uptick can be attributed to increased investments in digital marketing, an improved shopping experience, same-day and next-day delivery facilities, personalization of products and a broader assortment, including the latest product categories. Its express delivery program also bodes well.

Aaron’s GenNext real-estate strategy also appears encouraging. These GenNext concept stores come with larger, brighter and easier-to-navigate main showrooms offering new furniture, appliances as well as electronics. The stores also feature an expanded assortment and payment methods, and enhanced shopping experience.

This currently Zacks Rank #3 (Hold) stock has gained 3.2% in the past six months against the industry’s 6.1% dip.

Eye These Solid Picks

Some better-ranked stocks in the broader Consumer Discretionary space are Gildan Activewear (GIL - Free Report) , Delta Apparel (DLA - Free Report) and Columbia Sportswear (COLM - Free Report) .

Gildan Activewear flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and earnings per share (EPS) suggests growth of 8.9% and 3.3%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.

Delta Apparel currently carries a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 21.3%, on average.

The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and EPS suggests growth of 12.3% and 19.1%, respectively, from the corresponding year-ago reported numbers.

Columbia Sportswear currently has a Zacks Rank of 2. COLM has a trailing four-quarter earnings surprise of 203.3%, on average.

The Zacks Consensus Estimate for Columbia Sportswear's current financial-year sales suggests growth of 17.7% while the same for EPS indicates a rise of 8.1% from the respective year-ago  reported figures.