Why Rent-A-Center, Inc. Stock Lost 20% in January

By Jeremy Bowman Markets Fool.com

What happened

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Shares ofRent-A-Center(NASDAQ: RCII) tumbled 20% last month, according to data from S&P Global Market Intelligence. As the chart below shows, most of the drop came after the company reported weak preliminary fourth-quarter earnings in the middle of the month.

RCII data by YCharts.

So what

The rent-to-own retailer of durable goods hit the pavement when its preliminary earnings report landed well below the mark. Comparable sales at Rent-A-Center's core U.S. stores fell 14.2%, though that figure was better at its Acceptance Now stores, where they rose 1%-2%. The company also said its bottom-line results would be much worse than expected, guiding toward a loss of $0.20-$0.30 against analyst of estimates of $0.10 and down from a profit of $0.54 a year ago.

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Image source: The Motley Fool.

Management blamed continuing problems with its transition to a new POS (point-of-sale) system and that it did not recover lost sales as quickly as predicted.

Now what

The preliminary earnings report was just the latest piece of bad news for Rent-A-Center as the stock is now sitting at a post-recession low. The company is continuing to search for a new permanent CEO following the firing of former CEO Robert Davis early last month, likely due to the POS debacle. With the POS issues still persisting and the company in need of a full-time CEO, I expect the tough times to continue for Rent-A-Center for the foreseeable future.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.