Rent-A-Center, Inc. (RCII) announced the opening of a store in Bartlett, Tenn. This will mark the company’s 82nd outlet in the state.
The move reflects the company’s strategic approach of leveraging an extensive network of stores to effectively penetrate into its target markets, which in turn facilitates it to generate healthy sales and gain competitive advantage over its rivals, Aaron’s Inc. (AAN) and Advance America.
During the recently concluded fourth-quarter 2013, the largest rent-to-own operator in the U.S., opened 22 new Core U.S. locations, acquired 35 stores, consolidated 7 stores with existing locations and closed 32 outlets, bringing the total store count to 2,992. The company also opened 91 Acceptance Now stores, consolidated 13 stores with existing locations and closed 7 stores, resulting in 1,325 stores.
Only one international location was opened, bringing the count to 169 stores. Rent-A-Center Franchising International, which is a wholly owned subsidiary of Rent-A-Center, added 31 new locations and closed 65 locations, with the total store count remaining at 179.
For 2014, management plans to open approximately 30 rent-to-own locations in Mexico. Moreover, the company aims at about 100 domestic Acceptance Now kiosk additions.
Rent-A-Center offers consumer electronics, appliances and furniture products under rental purchase schemes that allow customers to own the merchandise upon completion of the rental period. Due to continued tightening of the credit market, customers see rent-to-own as a more flexible and viable option compared to credit. However, the sluggish recovery and a fragile job market may make customers reluctant to enter new rental-purchase deals.
Currently, Rent-A-Center holds a Zacks Rank #5 (Strong Sell) indicating lower-than-expected results in the third and fourth quarters of 2013, and a cautious outlook given the macro-economic headwinds that the company’s Core U.S. segment business is grappling with.
Other stocks worth considering are Horizon Technology Finance Corporation (HRZN) and Main Street Capital Corporation (MAIN) both holding a Zacks Rank #2 (Buy).