Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, welcome to The Aaron’s Company Incorporation Second Quarter 2023 Earnings Conference Call. My name is Glenn, and I’ll be the operator for today’s call. [Operator Instructions]

I will now hand you over to your host, Marc Levee, VP, Finance and Investor Relations, to begin. Marc, please go ahead.

Marc Levee

morning, good and you, everyone. Thank second Welcome earnings call. XXXX to our conference quarter

Chief today Douglas Financial Kelly me are Executive and Officer, Joining Aaron’s Wall. Chief Olsen; Officer, Steve Lindsay; President,

remarks, we posted earnings for prepared After of the Relations the our will investor.aarons.com. our the closed, after website release call at our market questions. we Investor Yesterday section on open

outlook. We results and quarter about our also posted second a slide year presentation XXXX that provides additional information full

to our During certain related looking, we including may make forward for today’s be outlook call, statements year. this those

including more forward-looking at release. For can Harbor notes statements, earnings please important found information, cautionary provision about refer the be Safe the these end of to the that

The year with the differ risks business see XXXX Also, statements. Safe actual please related filings risks the ended cause our and Form our cause other forward-looking from may results differ materially actual for XX-K of December statements. Harbor our to description the materially to XX, results may forward-looking to the provision content identifies SEC that from of a for that our

certain on presentation other included which and in EPS, investor have On free release EBITDA, earnings the we of companies. adjusted our presentation, non-GAAP investor detailed and supplemental non-GAAP and earnings, comparability including to for the been certain net non-GAAP the today’s website. supplemental with refer items posted tables financial reconciliation may flow and adjusted which in These cash performance measures, call, net in are our the affect in debt, non-GAAP EBITDA measures our release the adjusted

to over the Lindsay. I Douglas With turn that, will CEO, call now our

Douglas Lindsay

expectations, The that Company. for in for second part our controls. consolidated you earnings we focus I’m that for of your Thank ongoing by pleased everyone. interest us joining morning, internal cost report ahead Good today were Marc. quarter on company driven the delivered to and Aaron’s in Thanks,

from model prior of optimization benefited quarters. our portfolio lease a in also lease decisioning We healthier resulting from

business Aaron’s continue advantage. flow nature and dynamics its an strong of to The our be recurring revenue cash

operations and sheet net During $XX the quarter, strength balance generated debt we the reducing $XX improved cash flow by million. over of from our million in by

quarters, cut in half, to strategic nearly last growth while our we’ve net initiatives. the our in Over four invest continuing debt

the we to to our by market the a Business, larger-than-expected quarter segments. Aaron’s on portfolio initiatives I’m and also progress showrooms turning pleased In stores. more report Now made The adding hub and ended business lease GenNext size. We’ve that great optimization with

significantly and in well challenging These executing quarter, lease that performance. reduction on previously announced trends. improve decisioning portfolio are items we to We contributed the initiatives strong demand our offsetting our bottomline continue to customer cost continued performance second enhancements the

lease of our we back but look we lap half expect as trends these we made decisioning demand of improvements year. the in the begin cuts to As back half to to to we expect the sequential see last persist, year,

Now continue retail enhanced managing turning a BrandsMart Aaron’s strategic to purchasing and procurement Business. The we on to impact our actions. customer’s cost greater profitability extent BrandsMart. and Macroeconomic in factors at focused controls through Meanwhile, pricing than are to decisions

and of and anniversary our channel. e-commerce strategic value remain growing new expanding the one-year our BrandsMart celebrated in We compelling markets BrandsMart’s our into recently We proposition acquisition. opportunities, including confident growth long-term

segments. our EBITDA adjusted in our This As consolidated yesterday release. both provided but we updated our remains maintained customer and in in outlook. non-GAAP EPS lowered year, the environment the discussed, revenues challenging the we for demand business reflected outlook earnings is We

adjusted cash We outlook year. have flow the also increased our free for

focused in of on optimizing remain and multiyear continue make As profitability ahead, both we to businesses our we execution progress plan. on we look the strategic

competitive continue in to market are advantages and both we our us enhance investments the allows share BrandsMart. that Aaron’s to confident are and will distinct We making increase

posted we’ve I watch these Steve, turn know to stores. showcase that I our you website both encourage call our videos. investor over to BrandsMart GenNext on Before I Aaron’s the to and new want videos you that let

format, Our in most our customer stores serve. stores retail have and unique the enhanced provide in-store product experience. Aaron’s proposition shopping compelling a a BrandsMart markets value broad assortment the an we We believe and

Now I’ll over call turn the to Steve.

Steve Olsen

and everyone. Douglas, second Aaron’s The Business of ahead Thanks, delivered good our quarter internal expectations. morning, earnings

As more demand. mentioned, initiatives, continued we our cost which offset in Doug has executed customer reduction on well than challenges

took to were deliveries in quarters lease decisioning largely year-over-year. quarter. beginning year lease due of X% quarter. approximately the Actions to merchandise as Lease in company-operated fewer fewer was approximately prior XX% the and prior we This the to applications stores compared down tighten

with million. than lower we Our lease quarter the ended size of $XXX.X X.X% quarter, prior than year but expected. the a value portfolio This was larger

metrics. lease renewal quarter Aaron with Now XX for for pre-pandemic key company-operated for XX.X% rate our moving was year-over-year, was This lease the quarter. down points stores. The renewal second rate averages to but line basis in the our

quarter. Our the normal XX end reflects increase year-over-year of a and XX This trends. non-renewal year, rate was to at basis from increased due of basis second primarily points XX-plus-day seasonal rate points of the sequential QX X.X% this

pleased improvement lease This of a a as second write-offs. revenues We the percentage be our write-offs to lease reflects in with X.X% quarter. was merchandise continue for XX-basis-point improvement The for provision year-over-year.

growth for strategic important our about talk The Business. initiatives let’s Now Aaron’s

our performance in-store model. meaningful continues strategy the financial experience transformation to customer and operating store GenNext of Our through deliver

half storage. we stores of these quarter. XX% total of in to in our GenNext for accounted just XX end compares That over the retail the opened the bringing first prior At In quarter, lease revenues stores, year company-operated approximately the XX% XXX of sales. to year, the GenNext

year opened stores than of our Lease than higher rate at points one percentage legacy than grow average. store originations GenNext XX more in continue a less to

we in have look revenue than performance stores opening GenNext and forward our Our stores traditional stronger GenNext future. stores to new the

and addition, to showroom In our hub program. continue new we execute

So far showrooms, of XXX total the we year, year. XX locations converted to launched this since the last number converted bringing have we program

channel. to The turning Now Aaron’s e-commerce

XX,XXX digital aarons.com. our enhancing on assortment expanding strategies, the marketing products online with on and focus experience to improving continue shopping We over the

generated XX.X% year prior increased revenues represents initiated as quarter. of on aarons.com and now quarter, XX.X% the the compared some total in year-over-year leases revenues, lease X.X% In to

we are experienced pleased these increase lease aarons.com in of applications conversion volume of completed both We the on that year-over-year applications. and also the a

written to prior recurring from However, into compared result year This the decisioning revenue the quarters was lower average quarter. the decrease XX.X% and prior decreased portfolio e-commerce tighter in of ticket.

weekly During quarter, a also the launched we aarons.com. option payment on

weekly stores As reminder, we last QX rolled in in a out year. of payments

now low wherever to they can We our are customers shop. payment to we pleased choose option weekly that the offer flexibility a prefer

Now turning BrandsMart. to

as of our future for sales will be Please growth. sales last reporting reflects stores XX-Q Starting our the synergies operating mentioned, open work a just celebrated this anniversary BrandsMart our our see comparable of achieve for our implement we initiatives months. from to more XX to recently the team which one-year drive As Doug detailed strategic and a quarter, we I’m business. proud we definition. metric,

Comparable X. during sales weaker for especially improved, second major Day customer as traffic across trade down is down to compared Memorial and categories. year sales products promotional the result priced prior XX.X% of lower quarter quarter, to July ongoing the the key This customer and periods comparable were a quarter. Throughout our

sales Consistent down invest to year in marketing seek product prior we pressure new performance, to X.X% the strategies. of in sales, with experienced e-commerce continue quarter. our e-commerce overall represented total we attract we and X.X% in channel E-commerce sales customers, As to the BrandsMart product digital channel.

Despite the the the remain of demand profitability business. focused we challenges, on optimizing

savings direct For margin was procurement product to by a the XX actions. gross compared of This approximately our points quarter. second result the pricing quarter, and year improved as basis prior strategic

first our Finally, to I’m BrandsMart Augusta, report in in that excited we to open Georgia on new are store track QX.

that confident brand new our customer are resonate value this proposition We in market. and will

our performance. further to over to Now on the I’ll financial details turn call Kelly provide

Kelly Wall

website. regarding We documents financial will performance year-over-year Steve. presentation two investor Please of these on to periods on market XX-Q, and for comparisons our can found our I the company consolidated business detail Form make unless the otherwise, prior and Investor filed be outlook Also, basis. additional our Thanks, refer any stated segments. documents a these to after be yesterday for closed release and earnings Relations the

is Consolidated Business at retail sales lower revenues and quarter Aaron’s and BrandsMart. were fees with revenues second This the lease million. for million, due sales lower year-over-year XXXX The at and primarily $XXX.X compared retail decrease of $XXX.X to

million. business segments, both was EBITDA compared decrease year-over-year costs million, lower costs. partially the at adjusted Consolidated $XX.X is and with This offset personnel operating primarily $XX.X revenue by due lower to other

mentioned, as In lower Steve write-offs addition, Business. The Aaron’s were at

non-GAAP total EBITDA a X%, basis, diluted revenues, X.X%. As percentage to $X.XX, share a $X.XX. On per compared earnings were of compared to was adjusted

quarter, from expenditures. flow was at levels both $XX capital higher with very adjusted Adjusted were provided manage the It free million. to million, by an the improvements as adjusted we by demand in increase cash $XX Despite to cash lower our inventory benefited cash EBITDA driven current flow. free increase environment. of over the we and was This efficiency merchandise operations lower capital businesses reflect working also pleased

capital common company’s declaring we stock. and the to quarter, During the shareholders, $X.X XX,XXX million of in purchasing to shares continued dividend return

cash we the with $XXX.X addition, ended $XX.X In debt. million second quarter and of million of

from at $XXX.X of net Since Our debt million year, by have of quarter of the our balance debt net the of the XXXX. $XXX was QX end over last end million, second end the we million. a $XX.X quarter reduction reduced the

than EBITDA quarter leverage result, less a the to As debt X adjusted our net times. ratio ended at

earnings $X.XX quarter we full billion for be our and our provided that to release, Turning second revenues outlook. between total an consolidated year the expectation update updated XXXX our outlook. updated This company outlook will reflects to $X.XX billion. In the

in We expected the also have year consolidated sales outlook. of results to XXXX lower prior compared product reflect to half half in to BrandsMart at of as the our lowered the first back revenues our and reflect

EBITDA our both for continue and We’ve maintained cost adjusted to for invest segments non-GAAP outlook growth EBITDA our business consolidated EPS in our company. adjusted also initiatives. at efficiency maintained have We as and the we

in second Business initiatives additional we in that Aaron’s designed to earnings be to in heavily expect currently origination part of addition, in will in the The further year the the quarter. marketing due half other segment. drive activity and more is This investments lease fourth weighted new In

and we free quarters from cash flow increased have the strong This continued last improvements year. cash our efficiency first few inventory finally, the flow increase in adjusted capital working the outlook. of our year And of half and the reflects

Q&A. for now Operator to will the over I that, with the And call turn

Operator

from you. first comes We’ll [Operator question Jefferies. now is Instructions] your have Kyle, Joseph from line Thank open. Kyle our

Kyle Joseph

morning, guys. questions. for Thanks my Good Hey. taking

for a quarter. Just wanted sort to behavior of during here consumer sense the the get

trends you credit. early we benefited sense you saw quarter, you a credit this on us will you fewer give for Obviously, last us Aaron’s highlighted stable were that quarter. think, Can that saw margins, I continue despite there guys buyouts stable a that year, the Business? of expectations were a go sense rest what buyout margins the and give where for think The

Douglas Lindsay

Yeah. XX% XX% quarter, Kyle, demand noted Aaron’s demand I’ll trends, as in have our start. I that’s -- mean, been at at you saw and down from down challenging. would We say, the I BrandsMart. call, that

I half is real think a really within look The when Business, about that you is negative half closed decisioning Aaron’s that like XX% stores. X% negative XX% within is real demand, and is

about that’s And better we’re really so the the up encouraged than points, is holding price I think is what would retail, our shopping. business payment really because customers I are of which and lease-to-own say,

in Steve bit We’re can a about more we as little down trade retail, are the not seeing and as lease-to-own in that. much business talk

second be continues slightly lower second a huge in buyout is to quarter first this inflationary But environment, not lower early buyouts But to know, the they were to and the the as early you in quarter. the quarter adjust continue quarter. customer

I acclimating think, is this and has of resilient, challenging to environment. terms the remained consumer the in think, generally, I consumer, economic

pretty of down in trade really right, our the was at any rate coming yet. would sign rate, seen levels QX on renewal for and look we haven’t importantly, to you expect strong pre-pandemic, renewal pre-pandemic If relative what we a

continue significant We are we coming down. our at happens, waterfall quality still into if or higher slightly Aaron’s through Aaron’s, it customer have it believe to will We a trade through us. but a BrandsMart detected benefit that either data not seeing our

if a say on now our right and BrandsMart we would and really our little focused Steve I structure, and I’ll And is, we’re cost innovating let this that particularly really enjoy the we’ve benefits going last order, in thing bit believe the touch on over we rebound and rightsizing leverage shop ourselves when of with to the operating the forward does occur. high months, that positioned XX taken actions do well, business we’ve direct-to-consumer, last getting

business Steve So demand will what in challenging we demand. little in we feel future. can the trends, control up bit, the talk that about pull-forward set good but and a how we about

Steve Olsen

Kyle. and good Douglas, Thanks, Great. morning,

that macro believe We BrandsMart. on purchases, the touch retail obviously, quickly customer, more trends. large to Just these discretionary ticket is obviously, sensitive in

into BrandsMart be other side, on XX% well. value, -- of down think broken transactions about can as related XX%, XX that and transactions transaction it to really approximately average half demand is you XX% is or down down about that negative just our down When the the half about about

So what challenge ahead but what Average trend value is we facing truly averages, demand year. we’re versus is of pre-pandemic on only transaction our step still just back not ahead digits well a value a average that. last well transaction in saw double of transactions,

step We’re facing bit down, just a in little especially appliances.

sometimes say electronics just profitability sales unprofitable chasing those on BrandsMart addition, in in that we consumer category. in business In the focused and really are I’d that the not happen especially

ways to to still believe business we growth. in really and find So teams to continue define focused hard the

Douglas Lindsay

excited potential about long-term we’re Yeah. the super I’ll reiterate BrandsMart. just of that

cycle, through Steve and going and job his doing controlling team are are a costs. great We a

Kyle Joseph

Very us the stack Got a the looks on follow-up give what for for and a a then you And like give comps BrandsMart. helpful. us back sense of half really do XXXX, the XQ those if I comps sense just Can it. two-year then this easier year? you very the BrandsMart had comp little a a of when will bit strong in easing call get anticipate

Kelly Wall

Kyle. Hey, I’ll part the of that. answer Kelly. first It’s

recall, So so prior them. just as we’ve over the on period a you ago us to financials the provided company detailed comp, a to we two-year it not may relates owning year and acquired

operation I go a would to of you QX we Steve, comps as into of you But want and kind two-year about QX. So in think and to speak year, going say to to we here. lap rest comp have what as we’d provide to don’t what this to we stack the expect

Steve Olsen

Sure. Yeah.

will into the QX we expect So demand of said, as do as sequential challenges sales With we into half some that lap comparable Douglas I we improvement in referenced, referenced the and see in and back continued we numbers. year. believe QX

Kyle Joseph

Thanks a questions. it. my lot for answering Got

Operator

line have Thank We’ll Caintic is now you. from our question Vincent your Vincent, from comes next open. Stephens.

Vincent Caintic

perspective, about think Thank to I example, a additional the you that model the morning. just benefits margins? and Good and say, from GenNext model hub-and-spoke relates of for productivity Thank when my if wondering about, as was Nice the hub-and-spoke at questions. for you EBITDA GenNext talk see the taking we stores. it comps to can you.

Douglas Lindsay

Douglas. It’s Vincent. Thanks, Yeah.

first XX eight quarter opened we So in GenNext the stores second in quarter. the and

the were for XX Our this we’re of target of And and we track this XXXX, opened for which that. on believe year is quarter. I XX end in showrooms XX since

So right our for showrooms track XXX -- we’re year. on this

our where optimize to same a they more markets structure. The place larger, doing we’re the want the has efficient beauty we innovation where this the GenNext and five can interact build model so which to is creating with we’re years cost building relevant platforms with be then stores markets us served, put is platform hub and allowed and we’ve serve, all this over the digital of not to -- last in for customers we serving showroom more us, in it

box. and e-comm, They’re They’re that I I They with Showrooms at of people. articulated the think of spin, think stores. two is, fewer stores time sales I’d potentially have now smaller having just reach we to bigger showrooms. typically further warehouse. add a and within what effectively are the markets staffed the larger don’t

place larger also of showrooms are delivery hub it have around hubs stores returns. seat one our stores, able in our stores servicing feed logistics of distribution, productivity a greater to that many and GenNext, those but we’re market. are are house The legacy and some the and all them county in the there two They house market them put to the for or our gain in then and central so and

that of group cost effectiveness, stores. it terms In is for enhancing EBITDA of

We’re cost in few terms we typically and we program a it’s a that between of out headcount that, but taking year store do $XXX,XXX per $XXX,XXX efficiency. when

chain seeing also marketing is cost and in our of are there of this So showroom. that coming efficiency what obviously there’s and some the you’re benefit through. hub supply as coming of benefits analytics in quarter But well through

Vincent Caintic

expense nice Okay. see Great. results. you the It’s this in for efficiency Thank that. quarter’s to

really that next second you you yet. times? maybe you behaviors play But not couple quarters highlighted Thank as what question, over out to you’re maybe you. The how trade just so can seeing to activity and consumer in maybe talk go about the -- if tough if of through down of the expect you expect we time sort see

Kelly Wall

it Yeah. Vincent. Kelly. we’ve down that Hey, provided. the how It’s outlook to trade speak I’ll the and impacts

trade we’ll So down quarter, numbers in that out. see put significant that not similar assumed any to last we’ve the we’ve

be continue outlook our if to So happen. to that would see upside we that do

I back that of but customer what in during slightly we they renewal back constrained that QX see while that are levels believe so and to in this seeing into perspective, mean what expect From is rate the quite better we year-over-year a do to rates renewal certainly to expect last the going continue were year, saw relative a pandemic. and not bit the we we year, QX XXXX. we’d to the half than improvement

Douglas Lindsay

particularly so we’re would place of benefit decisioning I that’s would well, not we that I future our thing, we’re replacement And put think mix XX% say appliances, the prognosticating and important we a and electronics, in It an will some those category. expect us. we’ve the those… trade haven’t at is want of we do in and one XX%, down like acclimating, household where advantage competitive revenue. drive is back to business, to assumed but will which in release mentioned and a BrandsMart and on but little do earlier. cycle the pull-forward in tail of on customer the sales regular as I the computers than got businesses say This we Yeah. squarely a for demand replacement return last has a feel longer both and That down has that, of cycle it we point,

Vincent Caintic

Great. Okay.

Douglas Lindsay

BrandsMart… …

Vincent Caintic

Thanks so much.

Douglas Lindsay

Yeah.

Vincent Caintic

you. Thank Great. Great.

Operator

comes have Thank you. Scott, line from from is next your Truist. our We’ll open. Scot question now Ciccarelli

Joe Chalhoub

Hey, questions. guys. Joe for is my This Thanks Scot. on taking for

Given into LTO in you hold the the can side that seeing better of demand integrating of channel? the solution that some talk up the BrandsMart about business, you’re

Steve Olsen

is I’d Hi. This answer glad Also Steve. to Sure. be that.

year period and last continued that of time leasing improvements. reminder, leasing just growth store implemented May as very well we the on we the with team, the a pleased be continue integration, BrandsMart So, with results the the solution BrandsMart our BrandsMart in improvement the and to teams technology process and as team

portfolio From a the the see on payment standpoint, to as the performance activity. side, we BrandsMart well leasing as grow continue customer

So and growth. us expect further it’s we to drive and hope focus for key a that one

Joe Chalhoub

Got thinking the just that then you. year. And cadence still color X.X% and to be Cool. between XQ and super about if we what for write-offs helpful? on Is should would Thanks. XQ, on the any X.X% the be

Kelly Wall

Yeah.

the So X.X% we X.X%. to range are expecting write-offs of in still

change there no in you had on updated the call. what So last we

and performance quarter happy the with the QX the very with we and happy in We’re into fourth trends move beyond. as

write-off As of part the back the in there it in year, is seasonality relates business. to trends the

continue increase, them levels to expect but we write-offs in we we So of below would be XXXX. to experienced quarters that write-off same that the would expect

Joe Chalhoub

Great. Got Thanks, guys. it.

Operator

comes open. your now James. you. line Bobby Bobby, our Raymond from from We’ll is next question have Griffin Thank

Alessandra Jimenez

for our Good taking morning. Jimenez Bobby Thank question. Alessandra is This Griffin. you for on

given the primarily is customers Aaron’s not something business, else? some Is you a portfolio that utilize buyout The despite larger-than-expected term longer caution unchanged. there or of the side ending paid quarter impact will the size, XX-day year how the the on that on First, by unknown to left driven chose lease be with

Kelly Wall

demand be we’re we Kelly, the expect challenged of there, What that to earlier Yeah. in We it’s Alessandra, continue is going into talked year. about call. back the half seeing to the

activity, and QX QX QX, we’re payout lower those QX what and seeing rolling And activities in early we QX the with QX go off. deals so into into and and are EPO is, paying as

or demand the XXXX. impact levels the that as and of to growing on that higher relative the second the continues portfolio half we’re QX to again, and payoffs focused year. in of periods second QX so in size we into on of half head So -- portfolio least And the prior in year

Alessandra Jimenez

get the That’s through BrandsMart takes revenue? in the despite to helpful. Okay. segment on lower EBITDA us expected And consistent segment, puts then the can walk very maybe you and to

Kelly Wall

Two, takes the and that the margin. would the cost EBITDA. run to say to a declining sustained company a team done focused side, get I and that in cost can Puts to it, for BrandsMart one. to job the, control growth revenue necessary has forward, we’re up the business what to implementing the consistent great environment, preserve set going managing call we is, on

the to to to and to next As maintain level very -- demand expect year as we’re between pick the some the that addition going good the grow we leveraging we to would that topline new we’re new normal, leverage we the as and of costs. grow come going of margin return out feel fixed up starts topline, current store the as about of depressed environment into stores those and we we expand thereafter, continue

Douglas Lindsay

side thing, a both and side the margin. Yeah. purchasing last on -- team The on his the is of have And Steve pricing preserving business and great maintaining done the would say, as job I and this Douglas. that

that. business a sort don’t mid-XX% Steve, want are As ways know, hurt, to comment they’ve revenue you you that a the and I good offset that. so a bit job declines while know of in it’s if done a there margin to and on

Steve Olsen

do in sure well. improvement pricing the we really mentioned those, where one want of that focus to Difficulty] on and prepared to adjust is, business the do well of the for as to continues manage continue competitive focus pricing as as make that, key mentioned, we’re we price and we a there’s to we the market on ability products that obviously our opportunity we in great margin purchase value to great and actions Similarly, deals value [Technical the strategic remarks, the drivers as BrandsMart team Douglas proposition

procurement management business, So cycle. then move pricing expense to of well demand pricing labor Kelly, strategic including side with the the both the areas we for, of purchasing this the continued on focus reference demand through store to improved through a will as on power, further as just just expense side continue just as actions. focus to side it challenging environment, we through continue any the align And

Alessandra Jimenez

That’s very And was then for bit to average a in in me, difference helpful. parse given But between believe XQ? relatively BrandsMart and hard consumer it’s appliances segment. the industry do the you lastly in little electronics out the comp with performing that line BrandsMart

Douglas Lindsay

No. comp industry about but to you break I to don’t will -- speak more QX. down I really BrandsMart I’ll context want the our average, -- little tell in a the give

So versus appliances average pressure and the down business selling in about prior was overall was business above the the which that being year, where majority price, of down the pressure selling is the XX% X%. price approximately XX% under for average

more the what better in and the across that the forward occurred categories, team products, improvement result expand right TVs and in prices to small great assortment categories electronics inventory in our few we’re The has have a that and levels. other headwinds consumer years. in continue slightly in in done and significant we seeing of to ensure obviously, a lower job household goods right out that believe, trend, some ticket especially seeing we demand performance facing We’re prior the that pull appliances the

Alessandra Jimenez

and in half year. luck of the of the Thank much you back so best

Steve Olsen

you. Thank

Operator

now from from Loop Chukumba your next have open. We’ll Capital you. question Markets. comes Thank line Anthony our Anthony, is

Anthony Chukumba

the Good my guess option. thanks morning weekly taking question. on for and my payment was first question I

I related. You time. quite had for in mentioned it rolled stores guess you that you’ve two I questions had your out some aarons.com. know that to

in uptake can on incremental you. opposed Thank weekly payment of who customers as taking And First and payment weekly as much of that advantage weekly option? would the instead far paid option? pricing that have seen is one, what monthly or to is have terms tell, how option of someone you as then you

Steve Olsen

answer glad I Steve. is This that. Anthony. be also to Sure, will

just and is I this from customer to about the and an store channels, We we it know really across products they First, we’re to gives offering lease. decision online. option flexibility decide say, weekly what want important that in flexibility really excited payment both categories and think research driver as our

to break what really lease a do to From performance message very rates land our e-commerce at marketing. this look It’s the are down really call our standpoint, as we truly channel, business What competitive it? deliver us is, and success? really both on the we that And as strong allowing what’s value benefits with leasing hard across incremental. what using, well of business traditional of our we’re all

price is So weekly think at -- our piece key proposition low still overall landing a driver we small than in XX%, it’s our a but of our business, message. value less in

Douglas Lindsay

do think these points Yeah. but And growing Anthony, is we particularly we’re stores, that that. mean and in or it has price out very about our in we’re weekly disclose key been this Douglas. I and excited are we assortment to not competitive, going put our penetration core online

shop, we by share isn’t where over trying we trying doing best about take you us [Technical value to as our weekly this mean, -- price forward Difficulty] and believe we’ll so to together put it’s I know, about a that. the us put can time, become

Anthony Chukumba

Got clarification. it. in And are then stores? Is available BrandsMart that originated quick just weekly one for the option leases payment

Steve Olsen

at Not this time.

on the XX XX more options. months focused months lease and So

Douglas Lindsay

pay… the But

Steve Olsen

XX months, that. and apologize months XX I the for Sorry,

Douglas Lindsay

flexibility pay That’s Yeah. Anthony. term, is BrandsMart in but there frequency frequency, stores, pay the within the

Anthony Chukumba

you. Thank helpful. That’s

Douglas Lindsay

are You welcome.

Operator

you. Thank

is your open. from Jason Bank We America. from Haas last our line Jason, question of have now comes

Jason Haas

end What my thinking you rest the it like where the or and morning year. remainder looks are expecting the for questions. you’re of what taking the the year? to in Good there should of size growth I’m thanks about know curious Hey. how year in from, at like, portfolio the the lease

Douglas Lindsay

give Hey, just you I’ll It’s to high Jason. level. Douglas. it a

the first size, the of of the that, year year would towards portfolio at environment and the first year, more as the of had X% a we in time of but negative we that we rest the the negative to little know, of lease in in, throughout we a and down part communicated number. in year, then the started because As churn middle improve would still demand you the over number be part the year the more were

that much the seeing the back year still improving as curve and the We’re of part to year, not troughing it’s sort as of middle before. in of the but of

So softer of -- down the we expect the the to more portfolio not end influenced we’re by the the at demand a but year. number part giving of incrementally be still in back lease but for year, of half year, second the we’re the still

Jason Haas

for the That’s helpful. you. right, it then a because you with the but BrandsMart happened Thank to end a Got through better the BrandsMart the at if BrandsMart prior quarter, in -- commentary I’m as the I sounded April of now sense guidance. through BrandsMart had you’re guided And like curious follow-up, year, revenue what it. then got for the guidance? lowering the called And revenue get

expect back So if was the yeah, did much you’re that, through have hoped which and you it’s been why just the always guess, quarter, of as quarter? I through you It how half acceleration there? not an or what changing for, the the thinking like, year about an acceleration anticipating wasn’t the, as you what’s

Steve Olsen

is be This Steve. I’ll that. Jason. Hey, glad Yeah. answer to

So, in in QX, we pressure were as demand. experiencing we said

did deep during key holidays. -- in As obviously, periods demand into QX QX slight promotional into we around We demand continued. improvement our as progressed, that especially a got the QX, pressure see

few using expecting as that were occurred the for original replacement just look that the to some those with replacement And products. typically customers years we’ve in years, cycle half at and year a ago in expect in you our base, previously, throughout is back coming be purchases obviously, of really consumer now electronics as guidance, tied you’d improvement we will demand of replacement. when pandemic cycle a back that of with the And stated at,

So consistent we’re improve believe be just as half year one is trends business. in back cautious the the the trying some But to with little forward. demand. some easier demand. just want in the we lap to see BrandsMart we We improved from comps a first half the of going will do

Jason Haas

Got helpful. it. Thank you. That’s

Operator

Thank you.

Douglas to will line. Lindsay questions remarks. for closing on I further We back have pass no the now

Douglas Lindsay

We Thank everyone you, who’s Operator. us appreciate joined today.

franchisees thank and delivering and control up, to wrap business while and customers continuing at on innovate to members Aaron’s I costs. BrandsMart team and value to relentless Woodhaven and our focus we As our want service their exceptional our for our

strategic on company, by in us we growth today before multiyear investing soon. focused our talk we’ll again As strategies us. plan executing to you a our Thanks and remain for joining and

Operator

and today’s concludes this call. for gentlemen, Ladies joining. you. Thank you Thank

You disconnect may your now lines.

The Aaron's Company, Inc. (AAN) 1 Aug 232023 Q2 Earnings call transcript