Even as it released its fourth-quarter financials, Aaron’s Co. announced that it has entered into a definitive agreement to acquire BrandsMart U.S.A. for $230 million in cash.
BrandsMart, an appliance and consumer electronics retailer, operates stores in Florida and Georgia and the brandsmartusa.com e-commerce business. Its product assortment includes large and small appliances, consumer electronics, computers, furniture and other home goods. For the 12 months ended December 25, 2021, BrandsMart generated revenues of $757 million, Aaron’s noted.
The transaction provides Aaron’s with multiple benefits, the retailer stated, including:
- Broadens Customer Reach and Significantly Expands Total Addressable Market. Aaron’s expects the transaction to result in a combined entity with annual revenues over $2.5 billion, 11,000 employees and the ability to serve the full spectrum of prime and subprime credit customers.
- Leverages Aaron’s Strengths to Create an In-House LTO Solution. Aaron’s will use its existing know-how and assets to provide an in-house lease-to-own option for BrandsMart customers.
- Increases Product Assortment Available to Aaron’s Customers. Aaron anticipates creating a direct-to-consumer lease-to-own marketplace by offering Aaron’s customers access to much of BrandsMart’s extensive product catalog.
- Yields Significant Purchasing Power and Cost Synergies. By leveraging complementary merchandising capabilities and increased scale, Aaron’s expects the combined company to deliver significant annual product procurement savings over time.
- Enhances Financial Profile and Provides Significant Revenue and Earnings Growth Opportunities. The transaction, Aaron’s expects, will prove accretive to 2022 non-GAAP EPS.
“We are thrilled to announce our agreement to acquire BrandsMart, which we believe strengthens Aaron’s ability to deliver on our mission of enhancing people’s lives by providing easy access to high-quality products through affordable lease and retail purchase options. The acquisition is expected to provide meaningful value-creation opportunities, which include leveraging Aaron’s lease-to-own expertise to provide BrandsMart customers enhanced payment options and offering a wide selection of BrandsMart’s product assortment to millions of Aaron’s customers. Importantly, we believe the acquisition of BrandsMart will expand our addressable market and create an additional platform for accelerated growth,” said Aaron’s CEO, Douglas Lindsay, in announcing the transaction.
For the fourth quarter, Aaron’s posted net earnings of $16.3 million, or 50 cents per diluted share, versus $2.9 million, or eight cents per diluted share, in the year-earlier period.
Adjusted for one-time events, earnings were $19.4 million, or 60 cents per diluted share, versus $27.6 million, or 79 cents per diluted share, in the year-prior period.
Aaron’s beat a Yahoo Finance-published analyst consensus estimate of 39 cents per diluted share and a revenue estimate of $426.1 million.
Total revenues were $444.8 million, up 3.4% from the year-before quarter and comparable revenues increased 4.8% as e-commerce revenues increased 13%, the company indicated.
For the full fiscal year, Aaron’s posted net earnings of $109.9 million, or $3.26 per diluted share, versus a loss of $265.9 million, or $7.85 per diluted share, in the year earlier.
Adjusted earnings were $126.5 million, or $3.75 per diluted share, versus $102.9 million, or $3.02 per diluted share, in the year prior.
Total revenues were $1.85 Billion, up 6.4% from the year before and comparable revenues increased 9.3% as e-commerce revenues increased 20.1%, the company maintained.
