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Aaron's Adds Five New Stores

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Leading rent-to-own operator, Aaron's Inc. (AAN - Free Report) recently announced that it has opened five new stores at different locations within the U.S. between mid-October and early-November this year. These store openings are in sync with the company’s aggressive growth trend. The company opened one store each in - Delaware, Ohio; Ionia, Michigan; Franklin, Kentucky; Indianola, Mississippi and Towson, Maryland.

Earlier in September this year, Aaron’s marked the opening of its 2,000th store in Bronx, New York. Further, it has plans to strengthen its footprint and foster economic development in the New York market by increasing its store count and adding new jobs and partnership opportunities in the region.

Looking ahead, the company expects this store expansion trend to continue, with more stores expected to come up all over the U.S. The company has managed to expand its network of stores by 354, adding about 2,200 jobs and reporting solid quarterly results over the past three years. Moreover, Aaron’s intends to increase its new store count by 5%-7% in fiscal 2012 over fiscal 2011 and post a 4%–6% increase in store count in fiscal 2013 over fiscal 2012.

Aaron’s is a rent-to-own operator in the United States, and has a low price provider strategy. The company is involved in rental and specialty retailing of consumer electronics, residential and office furniture, household appliances, and accessories.

Currently, Aaron's has a customer base of over 1.6 million throughout the U.S. and Canada. The company offers its customers low monthly payments on a lease-to-own option and no credit checks on everyday brand name necessities such as refrigerators, computers, beds and televisions.

Moreover, Aaron’s leverages an extensive network of stores to effectively penetrate into its target markets, which in turn facilitates the company to generate healthy sales and gain a competitive advantage over its rivals. The company currently operates over 2,009 company-operated and franchised stores across Canada and 48 states of the U.S.

The company’s peer Rent-A-Center Inc. (RCII - Free Report) is also expanding its network of stores to boost its top line. For 2012, Rent-A-Center’s management plans to open approximately 35 domestic rent-to-own stores. 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.

Recently, in October Aaron’s posted outstanding third-quarter 2012 results with sales and earnings per share climbing approximately 9% and 28%, respectively. Based on strong quarterly results, the company raised its adjusted earnings per share guidance to $2.05–$2.09 compared with its earlier projected guidance range of $1.98–$2.06.

Currently, Aaron’s holds a Zacks #1 Rank, implying a short-term Strong Buy rating. We are also reiterating our long-term ‘Outperform’ recommendation on the stock.

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