Thorn Group, owner of Radio Rentals, has announced an increase of almost 60 per cent in its full year profit only a week after fellow electrical goods operator Rick Hart owner Clive Peeters collapsed went in to receivership.
A statement from Thorn Group said the profit was recorded despite a "soft retail market".
Radio Rentals' net profit for the 12 months to March 31 rose 58.2 per cent to $19.5 million, compared with $12.3 million a year earlier.
Net profit was $16.4 million when normalised for a one-off tax benefit of $3.1 million.
Thorn said this result means the group has doubled profit since its listing three years ago.
Thorn found that increased demand has been generated because many of its customers don't have mortgages.
This left customers less affected by rising interest rates and, in current economic conditions, preferring to rent rather than buy goods.
There is also emerging evidence of more people with mortgages preferring to try the company's "Rent, Try, $1 Buy!" promotion, where a customers can buyout the product for $1 after a 36 months rental.
"Our customers are showing there is strong and growing demand for our "Rent, Try, $1 Buy" offering and our responsible rental and lending policy has meant lower customer arrears and bad debts," managing director John Hughes said in a statement on Tuesday.
Revenue had grown 14 per cent to $145.1 million, normalised earnings per share were up 32 per cent to 12.69 cents, and gearing was lower, with debt to equity at 7.34 per cent.
Flat panel TVs were among the most popular rental products, Thorn said, with demand up 28 per cent and expected to continue strongly as households switch to digital broadcasting and seek increasingly larger screens.
All rental product categories experienced higher demand, with whitegoods providing about a third of new installations, audio visual and computers 40 per cent, and the remainder across furniture and gym equipment.
Thorn said the recently established Cashfirst, a personal term loan business, increased its loan book from $3 million to $5.5 million.
"Both these businesses (Cashfirst and business rental operation Thorn Business Services) have benefited from banks moving away from smaller size personal credit and SME equipment financing," the company said.
"Start up online retailing arm, BigBrownBox.com.au, found business conditions tough but is well positioned in the market and recently launched a range of small appliances and cooking products."
The group declared a final dividend of 3.76 cents fully franked, up from 2.56 cents.
