Aaron's, Inc. (NYSE: AAN) reported Q2 EPS of $0.12, $0.23 worse than the analyst estimate of $0.35. Revenue for the quarter came in at $672.5 million versus the consensus estimate of $672.91 million.

Reshaping the Core Business

In April, the Company introduced a plan to stabilize and improve the core Aaron's business. This plan focuses on same store revenue growth, enhancing Aaron's online platform, driving cost efficiencies, moderating new store growth, and strengthening the franchise network. As part of this process, more than $50 million in potential annual cost savings and efficiencies have been identified. Initiatives to realize these cost savings are already underway. Some of the specific actions being taken and cost savings identified in the core business are as follows:

• Annual cost savings of at least $15 million in the areas of non-merchandise purchases, general operating expenses and manufacturing costs to be realized in 2015 and beyond.
• The closing of 44 stores in the third quarter is anticipated to reduce operating costs by an estimated $6 million in 2014 and $17 million annually beginning in 2015. Further store rationalization will continue as warranted.
• In addition, we plan to eliminate approximately $10 million of annual operating expenses through restructuring operations and support functions, which we anticipate will include rationalization of personnel and associated costs. The impact of these reductions is anticipated to be seen in 2015.
• Enhancements in inventory management and related efficiencies are expected to result in a minimum of $10 million in savings in 2015.
• Improvements to the Aaron's online experience are currently being implemented on a test basis. Although the revenue and earnings contribution from this online initiative is expected to be small in 2014, we believe it will be a substantial revenue driver in future years.

"We have been aggressively developing our online strategy and are extremely pleased with an e-commerce pilot program we developed and deployed over the last two months," continued Allen. "We will continue to build on these key learnings as we work towards the rollout of our e-commerce platform in early 2015. This demonstrates our strategic initiative to reach out to customers in an ever evolving marketplace."

Aaron's sees Q3 2014 EPS of $0.36 - $0.41, versus the consensus of $0.46.

Aaron's also sees FY2014 EPS of $1.65 - $1.75, versus the consensus of $1.76.

For earnings history and earnings-related data on Aaron's, Inc. (AAN) click here.