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What: Shares of Aaron's (NYSE:AAN) finished down 10% after the lease-to-own retailer lowered its second-quarter guidance.
So what: Aaron's lowered its revenue guidance slightly, from $675 million to $672 million, but noted strong growth in its recently acquired Progressive finance business. However, the core business suffered, causing adjusted EPS guidance to be reduced from a range of $0.43 to $0.48 to a new range of $0.34 to $0.37. Management didn't provide details on the weak core retail performance but instead touted the strong growth in Progressive and said it will close 44 underperforming stores by the end of the third quarter, as part of its store rationalization strategy.
Now what: Analysts had expected earnings per share of $0.46 for the second quarter, so it's easy to see why the stock sold off today. Other retailers, especially home-focused ones, have given weak preliminary reports, so perhaps it's not surprising to see weak numbers from Aaron's. Management cited a challenging economic environment, as we've heard from retailers over the past two quarters, and it's difficult to predict when that, or the perception of it, will end. Aaron's is expected to report earnings next week.
Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.