CANFIELD Rainbow Rentals' sales increase despite lower 3rd-quarter profits

The company outlined some changes aimed at boosting its bottom line.
THE VINDICATOR
CANFIELD -- Sales improved at Rainbow Rental stores in the third quarter, but the company reported lower profits for the quarter and for the nine months ending Sept. 30 compared with last year.
Reports filed with the federal Securities and Exchange Commission show a third-quarter profit of $217,000, or 4 cents per share, compared with a $335,000 or 6 cents per share profit in the same period of 2002.
Rainbow Rentals, with corporate offices in Canfield, earned $926,000 or 16 cents per share in the first nine months of this year, compared with earnings of $1.3 million, or 23 cents per share in the comparable period a year ago.
Third-quarter sales were $25.4 million, up 4.5 percent from $24.3 million in the same period in 2002. Revenue at comparable stores opened on or before July 1, 2002, was up 1.1 percent.
Sales totaled $76.9 million in the first nine months of this year, compared with $74.1 million in that period in 2002. Revenue was down 0.8 percent at comparable stores opened on or before Jan. 1, 2002.
More stores opened
Company officials said store revenue was affected positively by an increase in stores opened in 2002, but that positive growth was offset by lower seasonal rentals of air conditioners, the discontinued rental of accessory items and promotional offers that lowered initial rental rates.
Results were adversely affected by costs associated with six new stores opened during the year, two of which were opened in the third quarter, the company said. Higher general and administrative expenses offset an increase in comparable store revenues and continued improvements in gross rental margins.
"Although we were disappointed in the bottom-line results of our seasonally slow third quarter, we are pleased that our clearance initiative positioned us well for the fourth quarter, our busiest quarter of the year," said Wayland J. Russell, chairman and chief executive officer.
Russell said new products represent a larger portion of Rainbow's store inventory, and officials believe that change will give the company a competitive edge in the fourth quarter.
The company said it is making some administrative changes to reduce expenses and has shifted customer-service responsibilities from its home office to its regional managers.
Officials also plan to use outside contractors for new stores and remodeling in lieu of maintaining a company-owned construction department.
Rainbow operates 125 rental-purchase stores in 15 states, including Ohio and Pennsylvania.