Rent-A-Center Expands in California

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 Salinas, California.

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 153 locations in California.

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.

Moreover, 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.

Management plans to open approximately 35 domestic rent-to-own stores for 2012. Through the year, the company targets to open 40 rent-to-own locations in Mexico and 6 in Canada. Moreover, the company aims at 300 domestic RAC Acceptance kiosk additions.

Currently, we have a long-term 'Neutral' recommendation on the stock. Moreover, the company has a Zacks #3 Rank, which translates into a short-term 'Hold' rating.