Our plans to open less than 75 new Company-operated and between 70 and 90 new franchised stores during 2008 are unchanged.
Charlie Loudermilk, CEO, Aarons

Aaron Rents (NYSE:RNT) said today that first quarter 2008 revenues increased 13% to $437.3 million compared to $387.9 million for the same quarter a year ago. Net earnings were $24.8 million versus $29.2 million last year.

"As previously announced we have slowed down our new store expansion plan in 2008 to concentrate on achieving better execution and improving overall profitability, and we believe the earnings results are evidence that we have started to see some positive results from this plan," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents.

"Our franchised stores once again outperformed Company-operated stores in same store revenue growth and collection efforts, however, we are pleased that we are making progress with our Company store level execution," Mr. Loudermilk added. "Net write-offs in the quarter at the Company-operated stores were lower as a percentage of revenue compared to the several previous quarters."

For the first quarter, the Aaron's Sales & Lease Ownership division increased its revenues 16% to $406.3 million compared to $351.2 million for the first quarter last year. Same store rental revenues (rental revenues earned in Company-operated stores open for the entirety of both periods) in the Aaron's Sales & Lease Ownership division increased 2.6% during the first quarter of 2008 compared to the first quarter of 2007.

"Our plans to open less than 75 new Company-operated and between 70 and 90 new franchised stores during 2008 are unchanged. Overall store count increased only slightly during the first quarter primarily due to closing and merging some stores not meeting our profit goals, and we will continue to do additional mergers and realignments throughout the year as deemed appropriate to improve profitability," Mr. Loudermilk continued. "Our guidance for the second quarter of 2008 is to expect revenues in excess of $405 million and diluted earnings per share in the range of $.34 to $.39. For the entire 2008 year expectations remain to achieve Company revenues of approximately $1.7 billion (excluding revenues of franchisees) and diluted earnings per share in the range of $1.40 to $1.55."

Consolidated rentals and fees increased 12% and franchise royalties and fees increased 11% during the first quarter of 2008 compared to the same period in 2007. Non-retail sales, which are primarily sales of merchandise to Aaron's Sales & Lease Ownership franchisees, increased 22% for the quarter compared to the first quarter of last year. The increases in the Company's franchise revenues and non-retail sales are the result of an increase in revenues of the Company's franchisees, who collectively had revenues of $167.4 million during the first quarter of 2008, a 13% increase over the 2007 quarter. Same store revenues for franchised stores were up 13% for the first quarter compared to the same quarter last year. Revenues of franchisees, however, are not revenues of Aaron Rents, Inc.

During the first quarter the Aaron's Sales & Lease Ownership division opened 14 new Company-operated stores, eight new franchised stores, two Company-operated RIMCO stores and two franchised RIMCO stores. The division also closed 20 Company-operated and three franchised stores during the quarter, merging their operations with other stores. In addition, the Company acquired 13 franchised stores and sold 11 Company-operated stores to franchisees. Also, during the quarter two new corporate furnishings stores were opened and two stores were closed.

The Company recorded a $2.3 million gain in the first quarter of 2008 relating to the sales of the Company-operated stores to franchisees. Included in operating expenses was $1.6 million for future lease obligations and other expenses related to the store closings.

Area development agreements were awarded during the quarter to open 50 additional franchised stores. At the end of March there were 300 franchised stores awarded that are expected to open over the next several years.

At March 31, 2008 the Aaron's Sales & Lease Ownership division had 983 Company-operated stores, 483 franchised stores, 29 Company-operated RIMCO stores and six franchised RIMCO stores. The Company also had 62 corporate furnishings stores.

Aaron Rents will hold a conference call to discuss its quarterly financial results on Wednesday, April 23, 2008, at 10:30 am Eastern Time. Audio of the call will be broadcast live. A link to the live webcast will be available from My RTO Portfolio.

Aaron Rents operates 1,565 Company-operated and franchised stores in 48 states and Canada.