Rent-A-Center Inc. (RCII), the largest rent-to-own operator in the U.S, announced the opening of two new stores, one each in the states of North Carolina and Georgia.
The company, through its latest stores, will offer furnishings, electrical devices, electronics and computers. With the inclusion of these new stores, Rent-A-Center now operates through 120 and 79 locations in North Carolina and Georgia, respectively.
The residents of the regions will now have an additional option of purchasing goods with flexible payment options (freedom to pay weekly, biweekly or monthly). Moreover, when the consumer is denied credit financing for a particular product from the retailer, Rent-A-Center, under its RAC Acceptance program acquires that product from the retailer and offers it to the consumer under a rental-purchase transaction.
The RAC Acceptance program is gaining traction and remains a significant contributor to the company’s top-line growth. The company expects to add 200 domestic RAC Acceptance kiosks in 2012.
Rent-A-Center has an extensive network of more than 3,000 stores, facilitating it to effectively penetrate into its target markets and gain a competitive advantage over its rivals, Aaron’s Inc. (AAN) and Advance America.
Apart from store expansions, the company is taking prudent steps to optimize rental merchandise levels in accordance with sales trends. Rent-A-Center implemented a centralized inventory management system, including automated merchandise replenishment. Moreover, a new centralized purchasing system allows better management of rental merchandise.
Going forward, the company remains optimistic about its future growth as it opens stores in international markets and accelerates the rollout of RAC Acceptance kiosks.
Currently, we have a long-term ‘Outperform’ recommendation on the stock. However, the company has a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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