Easyhome, Rent-A-Center swap stores in Canada, New York
January 3, 2013,
MISSISSAUGA, Ontario — Big ticket leasing merchant Easyhome has swapped its 15 corporate stores in New York state for 15 comparable stores owned and operated in Canada by Rent-A-Centre Canada.
In a statement, the publicly held Easyhome said the transaction, which closed Dec. 31, is in line with its efforts to improve the profitability of its core leasing business, which faltered somewhat throughout 2011 and 2012, in favor of its short-term consumer loan portfolio. The latter drove all of Easyhome's top and bottom line growth last year.
Moving forward, Easyhome will no longer operate any corporately owned stores outside of Canada.
"The journey to scale and acceptable returns with our corporately owned stores (in the United States) will take too long," David Ingram, Easyhome president and CEO, said. "Our U.S. franchise business, combined with our unique Be-A-Contender program, has demonstrated its ability to stand out and succeed in a competitive market. With the sale of our corporately owned stores in the U.S., we can now focus all of our U.S expansion efforts through our franchise business."
The second component of the exchange involved the purchase of the assets and operations of 15 leasing stores operated by Rent-A-Centre Canada, the Canadian subsidiary of Plano, Texas-based Rent-A-Center.
Ingram said that almost all of the acquired stores are located in markets already served by Easyhome. Over the next few weeks, these stores will be merged into a single location in each market. When that exercise is completed, Easyhome's net store count will be up by four.
"We are excited by the opportunity to acquire additional operations in Canada," Ingram said. "The acquired locations provide us with a large portfolio of assets and customer agreements. The proximity of many of these new locations to our existing stores also provides us with an opportunity to gain further efficiencies leading to better overall results."
Ingram also reported that since the transaction was an exchange of similar portfolios, there was no significant net cash involved in the deal, so Easyhome doesn't expect any real impact on its balance sheet although it should enhance the overall profitability of its now franchise-focused U.S. operation.
On Dec. 31, Easyhome operated 206 leasing stores (including 10 consolidated franchise locations), 103 easyfinancial locations and had 48 franchise locations, mainly in the U.S.
Meanwhile, the deal will shrink the number of RAC stores in Canada to 18. Mark Speese, chairman and CEO, said the company will focus its expansion plans on Mexico and other countries moving forward.
"While we intend to continue focusing on improving operating efficiencies in our remaining stores in Canada, the focus of our international segment is on Mexico and other international markets in which we believe our products and services would be in demand," he said in a statement, adding that RAC owned 90 stores in Mexico at the end 2012 and will add more locations there in 2013.