Rent-a-Center (RCII 10.66, +0.55) has climbed 5.4% in pre-market after the company concluded the review of its strategic and financial alternatives.
The company, which offers big-ticket items for installment payments, announced that after conducting a comprehensive review of its business, the company plans to continue executing its previously-disclosed strategic plan.
Rent-a-Center Board of Directors reviewed a range of potential transactions, but did not encounter any proposals that were viewed as favorable. Instead, the company plans to remain focused on executing its strategic plan, which has already provided a boost to results.
The company expects to generate over $100 million in run-rate savings on an annualized basis. Cost savings in 2018 are expected to total $70 million. The company's previous guidance called for annualized savings between $65 million and $85 million while savings in 2018 were expected between $43 million and $57 million.
The company believes that its new pricing model has led to improved customer retention while profitability is expected to continue showing improvement. Core U.S. same store sales grew 3.3% year-over-year in April while same store sales in May grew 3.6% year-over-year.
Rent-a-Center released guidance for the second quarter, priming the market for consolidated revenue between $640 million and $660 million while adjusted EBITDA is expected between $40 million and $50 million. Earnings for the second quarter are expected between $0.20 per share and $0.30 per share.
For the full year, the company expects consolidated revenue between $2.64 billion and $2.69 billion while adjusted EBITDA is expected between $160 million and $180 million. Earnings for the full year are expected between $0.65 per share and $0.90 per share.