Rainbow Rentals held its Q2 earnings conference call Wednesday, 7-30. The call lasted 33 minutes. Archived audio may be accessed from our stock page. A summary of the call is below.

Rainbow entered it's 14th state in late June with the opening of 4 stores in Louisville and Lexington Kentucky. The company consolidated one location in Buffalo New York, bring the quarter ending store count to 123.

Year over year, Rainbow gained 17% in deliveries, 11% in units on rent and increased average rental rate by $1.68. These gains were offset by various factors including the the loss of revenue from accessories. As is the industry trend, Rainbow discontinued many low cost accessory items such as scanners, video games, and webcams.

Wayland Russell
Chairman and CEO
"Our progress in unit gain was partially offset by our decision to exit some of our accessory sale items. The result of this decision had a short term effect on our top line". Referring to the discontinued items, Mr. Russell added, "We found them backing up in the backroom rather than going out on rent"

Rainbow reported 93.3% of potential revenue collected during Q2, a slight decrease from Q2, 2002 of 93.8%.

Wayland Russell
Chairman and CEO
"It's not unusual for collections to move 50 basis points. 93.3% is what I consider in the acceptable range, 93.8% last year would be in the exceptional range"

One analysts mention strong comp sales being reported by other RTO companies, specifically Aaron Rents, and asked CEO Wayland Russell to explain "Why [Rainbow] continues to lose market share?"

Wayland Russell
Chairman and CEO
"About 15% of our stores are underperforming". Mr. Russell added that substantial changes in personnel had been made in the underperforming markets and that newly appointed Director of Marketing Dan Griffin will make this "Public enemy number one."

Rainbow reported debt of $6.7 million as of June 30, and cash of $1.2 million.

Rainbow opened 13 stores in the past 12 months; 9 in 2002 and 4 in June 03. The company plans to open 6 more locations by the end of October.

Advertising expense for Q2 increased slightly due to a "reallocation" of advertising dollars. Rainbow will focus ad spending in Q2 and Q4, reducing it's spend in Q3.

In an average year, Rainbow rents 20 - 25 Air conditioners per store. AC rentals are lagging behind that number due to the unseasonably cool weather earlier in summer.