Rent-A-Center, Inc. Reports October Key Operating Metrics
Core U.S.
- Same Store Sales: (3.4%)
- Delinquencies: 6.9%, flat versus prior month, 180 basis points favorable versus prior year
- Average Monthly Rate of New Agreements: 14.2% favorable versus prior year
- Co-worker Turnover: 84.3% and 24.1 percentage points favorable versus prior year
Acceptance NOW
- Same Store Sales: 4.7%
- Delinquencies: 11.3%, 10 basis points unfavorable versus prior month, 280 basis points unfavorable versus prior year
In the Core U.S. segment, October same store sales continued improving
sequentially for a sixth consecutive month, with an 80 basis point
improvement from September. Lower seasonality negatively affected same
store sales as compared to the prior year period, due to an extra
Saturday in
Despite a decline in new rental agreements compared to last year, the pace of returns declined at a greater rate resulting in a net increase in the overall rental portfolio in October relative to last year. The higher quality rental portfolio has resulted in less agreement returns and improved customer retention and ownership rates. The new product assortment strategy has also increased the percentage of new product in the stores, which was up 700 basis points versus prior year in October. Although the Company’s product assortment includes more aspirational product versus prior year, there are still lower priced products available for customers that prefer lower rates.
The Company rolled out a customer experience management program called “Voice of the Customer” in October. The program is providing better visibility to customer experience opportunities at the store level, and feedback loops enabling root cause analysis and insights on how to provide a differentiated customer experience and building a customer-first culture. Co-worker turnover improved by 230 basis points sequentially in October. The more tenured workforce, improvements in customer feedback and training, and increased new inventory in stores puts the Company in a better position to drive agreement volume growth entering the holiday season.
In Acceptance NOW, same store sales were up 4.7 percent in October and
represents about one third of all staffed locations since the
calculation excludes new stores, locations impacted by transferred
agreements, and those impacted by the hurricanes. Delinquencies were at
11.3 percent in October and were 10.3 percent excluding Conn’s and
The Company is still in the early stages of implementing strategies to improve the Acceptance NOW business model and reduce delinquencies. Decision engine enhancements were made over the last several weeks that are showing better first payment default rates and are expected to reduce delinquencies and loss rates as the new agreements become a material part of our portfolio.
Metric Definitions
Core U.S.
- Same Store Sales - year over year revenue performance on comparable stores.
- Delinquencies - percent of customer agreements greater than 7 days past due. Starting in September of 2017, the Company started the process of charging off late stage delinquent customers earlier in the month in order to improve workforce efficiency. This change benefitted the delinquencies numbers in September of 2017 by approximately 40 basis points.
- Average Monthly Rate of New Agreements - average monthly rental rate for agreements originated in the period.
- Co-worker Turnover - annualized year to date store co-worker turnover.
Acceptance NOW
- Same Store Sales - year over year revenue performance on comparable stores.
- Delinquencies - percent of customer agreements, in staffed locations, greater than 32 days past due.
Same Store Sales
- Given the recent hurricanes, the Company instituted a change to the same store sales store selection, excluding geographically impacted regions for 18 months. This change will ensure the same store sales figure continues to accurately reflect the underlying performance of the business.
About
A rent-to-own industry leader,
Forward-Looking Statements
This press release and the guidance above contain forward-looking
statements that involve risks and uncertainties. Such forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "should," "anticipate," "believe," or “confident,” or the
negative thereof or variations thereon or similar terminology. The
Company believes that the expectations reflected in such forward-looking
statements are accurate. However, there can be no assurance that such
expectations will occur. The Company's actual future performance could
differ materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to: the
general strength of the economy and other economic conditions affecting
consumer preferences and spending; factors affecting the disposable
income available to the Company's current and potential customers;
changes in the unemployment rate; uncertainties concerning the outcome,
impact, effects and results of the Company’s exploration of its
strategic and financial alternatives; difficulties encountered in
improving the financial and operational performance of the Company's
business segments; the Company's chief executive officer and chief
financial officer transitions, including the Company's ability to
effectively operate and execute its strategies during the interim period
and difficulties or delays in identifying and/or attracting a permanent
chief financial officer with the required level of experience and
expertise; failure to manage the Company's store labor and other store
expenses; the Company’s ability to develop and successfully execute
strategic initiatives; disruptions caused by the operation of the
Company's store information management system, and its transition to
more-readily scalable, “cloud-based” solutions; the Company's ability to
develop and successfully implement digital or E-commerce capabilities,
including mobile applications; disruptions in the Company's supply
chain; limitations of, or disruptions in, the Company's distribution
network; rapid inflation or deflation in the prices of the Company's
products; the Company's ability to execute and the effectiveness of a
store consolidation, including the Company's ability to retain the
revenue from customer accounts merged into another store location as a
result of a store consolidation; the Company's available cash flow; the
Company's ability to identify and successfully market products and
services that appeal to its customer demographic; consumer preferences
and perceptions of the Company's brand; uncertainties regarding the
ability to open new locations; the Company's ability to acquire
additional stores or customer accounts on favorable terms; the Company's
ability to control costs and increase profitability; the Company's
ability to retain the revenue associated with acquired customer accounts
and enhance the performance of acquired stores; the Company's ability to
enter into new and collect on its rental or lease purchase agreements;
the passage of legislation adversely affecting the Rent-to-Own industry;
the Company's compliance with applicable statutes or regulations
governing its transactions; changes in interest rates; adverse changes
in the economic conditions of the industries, countries or markets that
the Company serves; information technology and data security costs; the
impact of any breaches in data security or other disturbances to the
Company's information technology and other networks and the Company's
ability to protect the integrity and security of individually
identifiable data of its customers and employees; changes in the
Company's stock price, the number of shares of common stock that it may
or may not repurchase, and the Company’s dividend policy and any changes
thereto, if any; changes in estimates relating to self-insurance
liabilities and income tax and litigation reserves; changes in the
Company's effective tax rate; fluctuations in foreign currency exchange
rates; the Company's ability to maintain an effective system of internal
controls; the resolution of the Company's litigation; and the other
risks detailed from time to time in the Company's SEC reports, including
but not limited to, its Annual Report on Form 10-K for the year
ended December 31, 2016, and its Quarterly Reports on Form 10-Q for the
quarters ended
View source version on businesswire.com: http://www.businesswire.com/news/home/20171116006439/en/
Source:
Rent-A-Center, Inc.
Daniel O’Rourke, 972-801-1104
VP -
Finance, Investor Relations and Treasury
InvestorRelations@rentacenter.com