Aarons 2012 Annual Report Download - page 4

My first full year as CEO of Aaron’s has
been extremely rewarding in many ways.
Last year we achieved the best financial
performance in the Company’s history.
Additionally, we made strides in building
a solid infrastructure and implementing
new processes to position ourselves for profitable
growth for years to come.
And Aaron’s is growing! Our numbers continue to
increase in store count, customers, revenues and
earnings. We offer an attractive solution toward helping
consumers acquire brand-name home furnishings
in today’s economic reality of tight credit and high
unemployment levels. The unique strength of the
Aaron’s business model gives consumers the ability to
obtain high-quality home furnishings with personalized
service, no credit checks, flexible payment plans and the
option to return a product at any time with no further
obligation. Ultimately, this model has enabled Aaron’s
to thrive and gain market share in periods of economic
expansion, as well as contraction. The operating results
through the years are proof of Aaron’s success.
Operating highlights of 2012 include:
• Revenues increased 10% for the year to $2.2 billion.
Our franchisees also collectively reported a 7% increase
in revenues to $976 million, although those revenues
are not revenues of Aaron’s, Inc.
• Net earnings for the year were $173.0 million as
compared to $113.8 million in 2011. Fully diluted
earnings per share for 2012 were $2.25, a significant
increase over the $1.43 recorded the year before. Results
for 2012 and 2011, however, reflected certain unusual
items, including the accrual of $36.5 million of expense
related to a lawsuit in the second quarter of 2011 and
the subsequent reversal of $35.5 million of this expense
in the first quarter of 2012, a $10.4 million retirement
charge in the third quarter of 2012 and $3.5 million
in separation costs in the fourth quarter of 2011.
• Same store revenue growth for the year for
Company-operated stores was 5.1% and for
franchised stores 5.0%.
• For the third year in a row, the Company achieved
more than 10% growth in the number of customers.
Customer counts on a same store basis for Company-
operated and franchised stores were up 7.8% and
9.6%, respectively, over a year ago. At the end of the
year, Aaron’s had over 1.1 million Company-operated
store customers and more than 600,000 franchised
store customers.
• The store count for the year increased 6.6%, as new
store opening goals were achieved. During the year
a net of 93 Company-operated and 36 franchised
stores were added to the Aaron’s system. This past
September, we celebrated the opening of our 2,000th
store, located in the Bronx, and we continue to see
new markets including all the boroughs of New York as
growth opportunities for the Company. At the end of
December, there were 2,073 stores open, a combination
of Company-operated and franchised stores.
• The HomeSmart weekly rental business, currently
consisting of 78 Company-operated and one franchised
store, grew revenues for the year to $55.2 million,
more than triple the 2011 revenues of $15.6 million.
Although revenue and customer growth has been good
in the HomeSmart stores, we continue to refine the
concept and store-level execution. At this time, we
do not plan on opening any additional stores until
possibly the latter part of 2013.
• Franchising efforts continue to be robust. During the
year, area development agreements were awarded to
open 45 additional franchised stores. At year-end, there
TO OUR SHAREHOLDERS
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