Rent-A-Center plans to close 280 stores
Move expected to boost operating income
By Furniture Today Staff -- Furniture Today, December 4, 2007
PLANO, Texas — Rent-A-Center said Monday it plans to close 280 stores within the next 90 days, or about 8% of its total units, in a move that is expected to boost operating income.
The stores to be shuttered generate about $140 million in revenues for the rent-to-own retailer, but the company said it will transfer rental purchase agreements to other stores and expects to retain most of them.
Rent-A-Center said it will take pre-tax restructuring charges of $36 million to $45 million in the current quarter, for costs including lease terminations and fixed asset disposal. It said it also expects it will have a cash outlay of $26 million to $30.5 million over the next 12 to 18 months associated with the move.
After the restructuring, it expects its operating income will increase by $2 million to $2.5 million a month.
“We continually analyze every aspect of our business in an effort to improve operating and financial performance,” said Mark Speese, Rent-A-Center chairman and CEO. “Accordingly, we evaluated every market in which we operate based on operating results, competitive positioning and growth potential. As a result, we identified approximately 280 stores that we intend to close and merge with existing Rent-A-Center stores within the next 90 days.”
Rent-A-Center acquired competitor Rent-Way just over a year ago, a move that led to a 20.9% revenue gain for the company in the most recent quarter, ended Sept. 30. Same-store revenues in the quarter were down 1.8%, however, and net earnings were up just 0.1%.
