The Texas economy is weak. This shouldn’t be a surprise given their exposure to the depressed energy industry. However, what is surprising is the number of companies blaming Texas for weak results this quarter. Interestingly, I don’t remember Texas being pulled out of operating results when its economy was booming (thank you Fed induced energy credit bubble).
One example of ex-Texas results came from Aaron’s (AAN) conference call last week, “In the quarter, same-store revenues were down 1.2%, and down 0.3% excluding Texas. This marks the fourth consecutive quarter of same-store revenue improvements. Texas had a pronounced negative impact on our comparable-store trends in the second half of 2015, and we are pleased to see improvement in both our Texas and non-Texas stores in the second quarter. Customer counts were down slightly on a same-store basis, and flat excluding Texas.”
I have nothing against Aaron’s. It’s a holding I’ve done well with and have owned numerous times (I do not own currently). And if management wants to disclose operating results for Texas, or every state for that matter, great – the more information the better. However, to be fair, I think it should be disclosed on both sides of the cycle.
Texas comparisons, along with energy related sales in general, will soon get easier for a lot of companies. For those companies pulling weak Texas and weak energy results aside this quarter, I hope this new information continues to be included once industry conditions improve and the energy drag becomes a benefit.