Rent-A-Center, Inc. Reports October Key Operating Metrics
November 16 2017 - 4:30PM
Business Wire
Rent-A-Center, Inc. (the “Company") (NASDAQ/NGS: RCII) today
announced key operating metrics for its Core U.S. and Acceptance
NOW (“ANow”) businesses for October 2017. The Company also
announced that, in light of the ongoing review of strategic and
financial alternatives by its Board of Directors originally
announced on October 30, 2017, the Company has determined to
discontinue the monthly reporting of key operating metrics, until
further notice.
Core U.S.
- Same Store Sales: (3.4%)
- Delinquencies: 6.9%, flat versus prior
month, 180 basis points favorable versus prior year
- Average Monthly Rate of New Agreements:
14.2% favorable versus prior year
- Co-worker Turnover: 84.3% and 24.1
percentage points favorable versus prior year
Acceptance NOW
- Same Store Sales: 4.7%
- Delinquencies: 11.3%, 10 basis points
unfavorable versus prior month, 280 basis points unfavorable versus
prior year
In the Core U.S. segment, October same store sales continued
improving sequentially for a sixth consecutive month, with an 80
basis point improvement from September. Lower seasonality
negatively affected same store sales as compared to the prior year
period, due to an extra Saturday in October 2016. Delinquencies
were down 180 basis points versus prior year. The average monthly
rate of new agreements was $117.64, up 14.2 percent versus prior
year, and the average monthly rate of all agreements was $115.80,
up 7.1 percent versus prior year.
Despite a decline in new rental agreements compared to last
year, the pace of returns declined at a greater rate resulting in a
net increase in the overall rental portfolio in October relative to
last year. The higher quality rental portfolio has resulted in less
agreement returns and improved customer retention and ownership
rates. The new product assortment strategy has also increased the
percentage of new product in the stores, which was up 700 basis
points versus prior year in October. Although the Company’s product
assortment includes more aspirational product versus prior year,
there are still lower priced products available for customers that
prefer lower rates.
The Company rolled out a customer experience management program
called “Voice of the Customer” in October. The program is providing
better visibility to customer experience opportunities at the store
level, and feedback loops enabling root cause analysis and insights
on how to provide a differentiated customer experience and building
a customer-first culture. Co-worker turnover improved by 230 basis
points sequentially in October. The more tenured workforce,
improvements in customer feedback and training, and increased new
inventory in stores puts the Company in a better position to drive
agreement volume growth entering the holiday season.
In Acceptance NOW, same store sales were up 4.7 percent in
October and represents about one third of all staffed locations
since the calculation excludes new stores, locations impacted by
transferred agreements, and those impacted by the hurricanes.
Delinquencies were at 11.3 percent in October and were 10.3 percent
excluding Conn’s and HHGregg agreements. The Conn’s and HHGregg
agreements have been more difficult to collect on than anticipated
and locations that received transferred agreements from those
closures have also struggled to maintain collections on their
existing portfolios.
The Company is still in the early stages of implementing
strategies to improve the Acceptance NOW business model and reduce
delinquencies. Decision engine enhancements were made over the last
several weeks that are showing better first payment default rates
and are expected to reduce delinquencies and loss rates as the new
agreements become a material part of our portfolio.
Metric Definitions
Core U.S.
- Same Store Sales - year over year
revenue performance on comparable stores.
- Delinquencies - percent of customer
agreements greater than 7 days past due. Starting in September of
2017, the Company started the process of charging off late stage
delinquent customers earlier in the month in order to improve
workforce efficiency. This change benefitted the delinquencies
numbers in September of 2017 by approximately 40 basis points.
- Average Monthly Rate of New Agreements
- average monthly rental rate for agreements originated in the
period.
- Co-worker Turnover - annualized year to
date store co-worker turnover.
Acceptance NOW
- Same Store Sales - year over year
revenue performance on comparable stores.
- Delinquencies - percent of customer
agreements, in staffed locations, greater than 32 days past
due.
Same Store Sales
- Given the recent hurricanes, the
Company instituted a change to the same store sales store
selection, excluding geographically impacted regions for 18 months.
This change will ensure the same store sales figure continues to
accurately reflect the underlying performance of the business.
About Rent-A-Center,
Inc.
A rent-to-own industry leader, Plano, Texas-based,
Rent-A-Center, Inc., is focused on improving the quality of life
for its customers by providing them the opportunity to obtain
ownership of high-quality, durable products such as consumer
electronics, appliances, computers, furniture and accessories,
under flexible rental purchase agreements with no long-term
obligation. The Company owns and operates stores in the United
States, Mexico, Canada and Puerto Rico, and Acceptance NOW kiosk
locations in the United States and Puerto Rico. Rent-A-Center
Franchising International, Inc., a wholly owned subsidiary of the
Company, is a national franchiser of rent-to-own stores operating
under the trade names of “Rent-A-Center”, “ColorTyme”, and
“RimTyme”. For additional information about the Company, please
visit our website at www.rentacenter.com.
Forward-Looking
Statements
This press release and the guidance above contain
forward-looking statements that involve risks and uncertainties.
Such forward-looking statements generally can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"intend," "could," "estimate," "should,"
"anticipate," "believe," or “confident,” or the negative
thereof or variations thereon or similar terminology. The Company
believes that the expectations reflected in such forward-looking
statements are accurate. However, there can be no assurance that
such expectations will occur. The Company's actual future
performance could differ materially from such statements. Factors
that could cause or contribute to such differences include, but are
not limited to: the general strength of the economy and other
economic conditions affecting consumer preferences and spending;
factors affecting the disposable income available to the Company's
current and potential customers; changes in the unemployment rate;
uncertainties concerning the outcome, impact, effects and results
of the Company’s exploration of its strategic and financial
alternatives; difficulties encountered in improving the financial
and operational performance of the Company's business segments; the
Company's chief executive officer and chief financial officer
transitions, including the Company's ability to effectively operate
and execute its strategies during the interim period and
difficulties or delays in identifying and/or attracting a permanent
chief financial officer with the required level of experience and
expertise; failure to manage the Company's store labor and other
store expenses; the Company’s ability to develop and successfully
execute strategic initiatives; disruptions caused by the operation
of the Company's store information management system, and its
transition to more-readily scalable, “cloud-based” solutions; the
Company's ability to develop and successfully implement digital or
E-commerce capabilities, including mobile applications; disruptions
in the Company's supply chain; limitations of, or disruptions in,
the Company's distribution network; rapid inflation or deflation in
the prices of the Company's products; the Company's ability to
execute and the effectiveness of a store consolidation, including
the Company's ability to retain the revenue from customer accounts
merged into another store location as a result of a store
consolidation; the Company's available cash flow; the Company's
ability to identify and successfully market products and services
that appeal to its customer demographic; consumer preferences and
perceptions of the Company's brand; uncertainties regarding the
ability to open new locations; the Company's ability to acquire
additional stores or customer accounts on favorable terms; the
Company's ability to control costs and increase profitability; the
Company's ability to retain the revenue associated with acquired
customer accounts and enhance the performance of acquired stores;
the Company's ability to enter into new and collect on its rental
or lease purchase agreements; the passage of legislation adversely
affecting the Rent-to-Own industry; the Company's compliance with
applicable statutes or regulations governing its transactions;
changes in interest rates; adverse changes in the economic
conditions of the industries, countries or markets that the Company
serves; information technology and data security costs; the impact
of any breaches in data security or other disturbances to the
Company's information technology and other networks and the
Company's ability to protect the integrity and security of
individually identifiable data of its customers and employees;
changes in the Company's stock price, the number of shares of
common stock that it may or may not repurchase, and the Company’s
dividend policy and any changes thereto, if any; changes in
estimates relating to self-insurance liabilities and income tax and
litigation reserves; changes in the Company's effective tax rate;
fluctuations in foreign currency exchange rates; the Company's
ability to maintain an effective system of internal controls; the
resolution of the Company's litigation; and the other risks
detailed from time to time in the Company's SEC reports,
including but not limited to, its Annual Report on Form 10-K for
the year ended December 31, 2016, and its Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2017, June 30, 2017, and
September 30, 2017. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date of this press release. Except as required by law, the Company
is not obligated to publicly release any revisions to these
forward-looking statements to reflect the events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events.
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version on businesswire.com: http://www.businesswire.com/news/home/20171116006439/en/
Rent-A-Center, Inc.Daniel O’Rourke, 972-801-1104VP - Finance,
Investor Relations and
TreasuryInvestorRelations@rentacenter.com
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