Thread regarding Rent-A-Center Inc. layoffs

Question about store closures

I work for an investment firm and I've been tasked with looking into RCII as well as Aaron's. I'm getting up to speed with the current issues and one area I'm trying to figure out is that same store sales have been strong in 2018, is this because things are getting better or is it more due to the impact of store closures where the rental agreements get switched over to a current store?

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Post ID: @WSvJToG

12 replies (most recent on top)

The company did good overall last year but the direction of the company is to franchise. So soon there truly will not be a RAC left in its original form. I would not invest in RAC at this time.

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Post ID: @WSvJToG-Jqjg

Oh all the times those poor customers were called without knowing they’ve had an agreement in their name.

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Post ID: @WSvJToG-vdqj

Ghost Ds are racs dirty little secret, you would have to be an insider to know that. Same thing about fake credit. The franchisee in Florida is kicking butt and taking names, he bought Arizona and has an ex top vp from rac running it. The historical trend when rac merges stores is popr because the store manager cant manage it. As far as same store sales rac can report who, what and when if it makes them look better and keep them from paying out a bonus to the store manager.

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Post ID: @WSvJToG-ognn

Okay as an outsider this is what I see:

1/ Cost cuts across the board: seems they have cut too far, optically helps short-term results but will(is) causing longer-term problems

2/ same store sales have been rebounding, but if a store receives at least 5% of its agreements within a quarter from ANOW and/or Core then this store is not included in the same store sales calculation. I can see how maybe this skews the numbers a bit, but if a store is being merged I would think this takes less than 1 quarter and then something like 50% of its agreements go to one store and the other 50% go to another store. Then these stores will be excluded. Unless I'm missing something?

3/ ANOW has stumbled vs Aarons: losing Lowe's, I've heard some Buddy's are testing out Aarons, etc.

4/ sales leaders seem aggressive with these potential ghost sales? I haven't heard much about that

5/ But why not sell to Vintage? If they are just putting a bandaid on a big problem, eventually that will unfold and the stock will be single digits. Vintage had the money, they were backed by B Riley, why not take the $15? That's the part I don't get. It seems all the moves are short-term and there's no fix, that the model could be structurally challenged, and now Vintage can save the day but they find the loop hole to get out.

6/ the franchise idea seems like a stretch?

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Post ID: @WSvJToG-oppa

Especially those ghost accounts they would make us create to imagine sales which don’t exist. If a customer gave the slightest notion they were interested in something (and their info is already in the system), then it would be a type up. It turns into a take down if the customer does not show up within the week or two of free time received. I think they stopped a lot of free time by the time I quit after ten years. Either way, the numbers are false, the best people left cause we knew better after staying so long hoping for better days change after change.

Investing in RAC is like investing in Enron. You heard it from me!

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Post ID: @WSvJToG-nhzy

I agree, there has been no substantial growth in core stores, April will give you a better picture of racs financial situation.

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Post ID: @WSvJToG-ints

The formula to make profit at rac is very specific, depreciation, labor etc. Your collection numbers and sales numbers have to have integrity and be done with respect. The problem is that rac mgmt has very little of both. When you apply the wrong kind of pressure you get the wrong results. You see how rac is handling the merger, they feel asleep at the wheel years ago and let the PE firms infiltrate their business and now they are biting the hand that helped them get from 7.00 per share to 15 per share.

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Post ID: @WSvJToG-heoh

true

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Post ID: @WSvJToG-hxuw

poster @rhg nails it

it's 100% accurate

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Post ID: @WSvJToG-hidf

But they exclude the merged stores from same stores right, until 2 years after. I think business is turning around, ANOW volumes are up, the regular stores are up. I think tenure for the store managers is still long (with turnover happening at the associate level). It seems things are on the right path

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Post ID: @WSvJToG-bvpi

Good point, rumor has it they had low 4th qtr rentals. The next 3 months customers will return their rentals and go buy what they need cash. Low q4 sales + tax season = bad news.

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Post ID: @WSvJToG-8mkk

Much of the same store sales increase is due to rent a center home office cut backs showing up as growth under corp allocation on the P/l. There is also store closures and anow account transfers into rac stores. None of what you read on same store sales is due to real growth. Be very careful when you invest in rac, a sale at rac doesn't always translate into cash flow or profit.

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Post ID: @WSvJToG-rhg

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