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Rent-A-Center Expands in New York

RCII AAN

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Rent-A-Center Inc. (RCII - Analyst Report), the largest rent-to-own operator in the U.S, leverages an extensive network of stores to penetrate into its target markets, which facilitates the company to generate healthy sales and gain an advantage over its competitors.

Following its rationale, Rent-A-Center, which competes with Aaron’s Inc. (AAN - Snapshot Report) and Advance America, recently announced the opening of its new store in East Harlem, New York.

The company, through its latest stores will offer luxury furnishings, electrical devices, electronics and computers to the residents of this region. With the inclusion of this new store, Rent-A-Center now operates through 176 locations in New York.

The residents of the region will now have an additional option of purchasing goods with flexible payment options, giving them the freedom to pay weekly, biweekly or monthly. Moreover, the company offers a lifetime recall service, which facilitates its customers to re-rent the same or a comparable item and receive payments.

Apart from store expansion, the company is also 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 accelerating the rollout of RAC Acceptance kiosks. Management maintained its fiscal 2012 earnings projection of $3.00 to $3.20 per share.

Moreover, the company reiterated its revenue growth forecast of 7% to 10% for the year, attributable to a low single-digit jump in the Core U.S. and more than $300 million contribution from the RAC Acceptance business. Management expects comparable-store sales between 2.5% and 4.5%.

Currently, we have a long-term ‘Outperform’ recommendation on the stock. Moreover, the company has a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating.

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