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Rent-A-Centre Enhances Store Base

RCII AAN

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Rent-A-Center Inc. (RCII - Analyst Report), the largest rent-to-own operator in the U.S, announced the opening of two new stores, one each in the states of Louisiana and Texas.

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 48 and 280 locations in Louisiana and Texas, 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 any 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.

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 remains on track 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.

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 - Snapshot Report) 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.

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.
 

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