TOP CONTRIBUTORS

Robert Plaza

www.zacks.com

Rent-A-Center, Inc. (RCII) is the nation's largest rent-to-own (RTO) operator. RCII currently operates roughly 3,300 company-owned stores across the U.S., Canada, and Puerto Rico. This equates to roughly 40% of all RTO stores in the U.S. RCII s ColorTyme subsidiary is a national franchisor of RTO stores. The stores generally offer durable goods such as home electronics, appliances, computers, and furniture and accessories. The product range includes quality brands such as Sony, Philips, JVC, Mitsubishi, Whirlpool, Hewlett-Packard and Dell. The products are offered under flexible rental-purchase agreements that typically allow the customer to obtain ownership of the merchandise at the conclusion of an agreed-upon rental period. RCII typically serves the "under-banked" consumer (75% of their customers have household income of $15,000 to $50,000), and the rental-purchase agreements are designed to appeal to a wide variety of customers by allowing them to obtain merchandise that they might otherwise be unable to obtain due to insufficient cash resources or a lack of access to credit. The agreements also cater to customers who only have a temporary need. Rent-A-Center does not run a credit check, verifying only the customer's address and source of income through referrals. The company only accepts cash as payment.

Store Revenue (including non-refundable rental payments, advance fees, installment payments and merchandise sales) accounts for 98% of total revenue. Franchise revenue (including royalty income and fees) accounts for the remainder. In previous years, RCII grew through both acquisition (of under-performing regional stores and defunct competitors) and the opening of new stores.

References