A heightened emphasis on e-commerce, store closures and operational efficiencies are among the strategic initiatives underway at Aaron’s where the operator of 2,100 stores is looking to restore growth of furniture, electronics, appliances and accessories.
The company posted disappointing second quarter results which prompted CEO Ronald Allen to elaborate on several strategies the company had highlighted earlier this year.
"We have been aggressively developing our online strategy and are extremely pleased with an e-commerce pilot program we developed and deployed over the last two months," Allen said. "We will continue to build on these key learnings as we work towards the rollout of our e-commerce platform in early 2015. This demonstrates our strategic initiative to reach out to customers in an ever evolving marketplace."
Online initiatives are expected to have a minimal impact on sales this year, but longer term the company said it expects online will be a substantial revenue driver.
Other moves highlighted included the closure of 44 stores in the third quarter of this year and a vague reference to further store rationalization as warranted. In addition to expense savings from the closures, the company said it would pare $10 million from its operating expenses by restructuring operations and making undisclosed job cuts. It also expects to save money through enhancements to its inventory management system.
The strategic moves were announced in conjunction with disappointing second quarter financial results. Although sales increased 22% to $672 million in the quarter ended June 30, the gain was driven entirely by an acquisition of the Progressive Finance company as same store sales declined 3%. Profits fell sharply to $8.5 million, or 12 cents, compared to $25.9 million, or 34 cents a share the prior year.
"Our acquisition of Progressive Finance opens new and fast-growing channels to our customers that we previously could not access. The combination with Progressive positions Aaron's to maintain its leadership position in the lease purchase market and drive shareholder value,” Allen said. “We believe there are tremendous synergy opportunities with Progressive, and initiatives to capture these synergies are underway. While we are excited about our future prospects, we are not pleased with the performance of our core business.”