Aarons 2014 Annual Report Download - page 25

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15
ITEM 1A. RISK FACTORS
Aaron’s business is subject to certain risks and uncertainties. Any of the following risk factors could cause our actual results to
differ materially from historical or anticipated results. These risks and uncertainties are not the only ones we face, but represent
the risks that we believe are material. However, there may be additional risks that we currently consider not to be material or of
which we are not currently aware, and any of these risks could cause our actual results to differ materially from historical or
anticipated results.
We are implementing a new strategic plan and there is no guarantee that the new strategic plan will produce results
superior to those achieved under the Company’s prior plan.
We have a new strategic plan that, in addition to acquiring Progressive Finance Holdings, LLC (“Progressive”), includes
focusing on improving same store revenues in our core stores, rationalizing underperforming stores and developing our online
platform.
While the Company has always engaged in elements of the new strategy, the new strategy calls for increased emphasis on
certain elements while moderating the focus on new store openings that had traditionally been a central tenet of the Company’s
strategy. There can be no guarantee that the new strategy will yield the results we currently anticipate (or results that will
exceed those that might be obtained under the prior strategy), if we fail to successfully execute on one or more prongs of the
new strategy, even if we successfully implement one or more other prongs.
We may not fully execute on one or more elements of the new strategy due to any number of reasons, including, for instance,
because of the division of management, financial and Company resources among multiple objectives, or other factors beyond
or not completely within our control. The successful execution of our new strategy depends on, among other things, our ability
to:
• improve same store revenues in stores that may be maturing;
• rationalize our store base, including containing the costs of eliminating underperforming stores;
• identify which markets are best suited for more disciplined store growth; and
• introduce ecommerce to our customer base.
If we cannot address these challenges successfully, or overcome other critical obstacles that may emerge as we gain experience
with our new strategy, we may not be able to expand our business or increase our revenues or profitability at the rates we
currently contemplate, if at all.
If we cannot integrate our recent acquisition of Progressive successfully, or if we are unable to expand and profitably
operate the Progressive business, our business and prospects as a whole could be materially adversely affected.
On April 14, 2014, we completed the acquisition of Progressive, a virtual lease-to-own company, for $700 million. The
continuing development of the Progressive business is key to our new strategy. We incurred approximately $491 million in
indebtedness to partially finance the acquisition.
The success of the Progressive acquisition will depend significantly on how quickly and efficiently the acquired business is
integrated with us. Integration of a substantial business is a challenging, time-consuming and costly process. The continued
successful integration of Progressive will continue to require the dedication of significant management resources that may
temporarily detract attention from the day-to-day businesses of both Aaron’s and Progressive.
Any disruption in Progressive’s business or changes in its business processes or methods could impede our ability to expand
and profitably operate the Progressive business.
Our same store revenues have fluctuated significantly and have declined in recent periods.
Our historical same store revenue growth figures have fluctuated significantly from year to year. For example, we experienced
same store revenue declines of 2.8% in 2014 and growth of .9% in 2013. We calculate same store revenue growth by
comparing revenues for comparable periods for all stores open during the entirety of those periods. Even though we have
achieved significant same store revenue growth in the past and consider it a key indicator of historical performance, our more
recent same store revenue growth has not been as robust, and we may not be able to restore same store revenues to historical
higher levels in the future. A number of factors have historically affected our same store revenues, including:
• changes in competition;
• general economic conditions;