Aarons 2008 Annual Report Download - page 4

Our Company achieved record results in 2008, demonstrating the strength of our
business during extremely difficult economic conditions and reinforcing our confidence
in future success.
Revenues increased 14% for the year to $1.593 billion while net earnings rose 12%
to $90.2 million and diluted earnings per share from continuing operations grew
19% to $1.58. Two factors were critical to these results. First, our business has done
well in the current economic environment as we have seen an increasing number of
customers come to our stores. Second, Aaron’s reaches the higher end of a large and
growing market of credit-constrained households that represent a significant part of
the U.S. population.
Same store revenue growth for Company-operated Aaron’s Sales & Lease Ownership
stores increased 3.1% for stores open over two years at the end of 2008. Reflecting
the growing appeal of Aaron’s, we gained approximately a net of 200,000 customers
in 2008, an increase of 19%, for a new record total of over 1.1 million customers
of Company-operated and franchised stores combined. One-third of these customers
shopped at our franchised stores which also achieved outstanding growth in 2008 with
an impressive 19% increase in revenues to $665.5 million, which are not included in
the Company’s results.
During the year we continued a solid rate of expansion, opening 49 new Company-
operated stores and 68 new franchised stores. We awarded area development
agreements to open 149 additional franchised stores which should assure strong
future growth. At year end there were 282 awarded franchised stores expected to
open in the next several years.
To focus more closely on our core business and improve future performance, in
Nov ember 2008 we sold for over $75 million cash substantially all of the assets of
the Aaron’s Corporate Furnishings division, the residential rent-to-rent operation that
had been the legacy business since the Company’s early years. Although the division
represented approximately 6% of the Company’s consolidated revenues, the recent
growth rates and long term potential had not matched the fast-growing Aaron’s
Sales & Lease Ownership division. Consequently, we expect the divestiture to result
in increased revenue and earnings growth rates in the future. In addition, the sale
enables us to significantly strengthen our balance sheet and better utilize our
corporate resources.
During the year we acquired a substantial number of franchised stores and we sold
some Company-operated stores to franchisees. These realignments were made to
improve the performance of all of our stores. In a transaction expected to contribute
to earnings in the year ahead, we acquired 35 stores of Aaron’s franchisee Rosey
Rentals, L.P. located in six Southeastern states. We also were very pleased that Tiger
John Cleek, President of the Association of Progressive Rental Organizations (APRO)
and the owner of a well-respected rental chain in Missouri, joined the Aaron’s franchise
family in 2008. In February 2009, another significant expansion of our franchise
program was achieved through an agreement with Kelly Rentals, Inc. to convert its
23 sales and lease ownership stores in North Carolina and Virginia to Aaron’s stores.
We will continue to explore opportunities with other rental operators that offer
profitable synergies with Aaron’s.
To Our Shareholders
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