The Aaron's Company, Inc. ( AAN Quick Quote AAN - Free Report) has opened its latest GenNext store in Fort Smith, AK. This move will help expand the company's GenNext store initiative and offer better in-store customer experience. Store timings are from 10:00 a.m. to 8:00 p.m. from Monday to Saturday. The GenNext initiative was originally launched in 2018 and has received positive customer feedback since then. The initiative includes new and remodeled stores. To date, Aaron's has converted or opened 32 GenNext stores, bringing the total to 243. These stores come with re-engineered store layouts, updated signage, expanded product assortment, enhanced technology-enabled checkout and an innovative operating model. What’s More?
This Zacks Rank #3 (Hold) company has been gaining from cost-reduction initiatives and a solid online show. It continued to witness strength in its e-commerce platform. In second-quarter 2023, e-commerce lease revenues rose 5.5%, accounting for 17.9% of the total lease revenues. The uptick can be attributable to increased website traffic and a higher conversion rate.
Some other notable efforts include increased investments in digital marketing, improved shopping experience, same-day and next-day delivery services, the personalization of products, and a broader assortment, including the latest product categories. Its express delivery program also bodes well. The company’s latest acquisition of appliance and electronics retailer, BrandsMart, enabled AAN to offer high-quality furniture, appliances, electronics, and other home goods on affordable lease and retail purchase options to its customers. In second-quarter 2022, Aaron’s included BrandsMart revenues for the first time since its buyout. For the BrandsMart segment, revenues were $143.8 million in the second quarter of 2023, driven by strength in small appliances and housewares, and e-commerce. The company is optimistic about the segment’s performance in the near term. The buyout is likely to strengthen Aaron’s market position and help expand the customer base. However, weak lease revenues and fees, and drab retail sales at both Aaron's and BrandsMart businesses are headwinds. This led to a consolidated revenue decline of 13.1% in the second quarter. Also, continued inflationary and other economic pressures affecting customers' payment activity act as deterrents. Both segments are expected to continue experiencing softness in customer demand in its core product categories, including appliances, furniture and electronics, in the second half of the year. Consequently, management anticipates 2023 revenues of $2.12-$2.22 billion compared with the earlier stated $2.15-$2.25 billion. The lowered revenue outlook is mainly due to lower early purchased options and drab retail sales at the Aaron's business in the second quarter, which is likely to continue throughout the year. For 2023, adjusted EBITDA (excluding stock-based compensation) is likely to be $140-$160 million. The company expects earnings per share of 55-80 cents compared with the earlier stated 70-95 cents. For the BrandsMart business, revenues are anticipated to be $615-$645 million, lower than the $645-$675 million stated previously.
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As a result, AAN shares fell 25.9% in the past three months against the
industry’s growth of 9%. Stocks to Consider
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