Rent-A-Center Expands in California

Zacks

Rent-A-Center Inc. (RCII), the largest rent-to-own operator in the U.S, announced the opening of a new store in Napa, CA.

The company, through its latest store, will offer furniture, appliances, electronics and computers. Rent-A-Center conducts operations through 156 locations in California.

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 last reported quarter, the company opened 7 new Core U.S. locations, acquired 3 stores, consolidated 16 stores with existing locations and closed 1. The company also opened 98 RAC Acceptance stores and consolidated 11 stores with existing locations, resulting in 1,053 stores.

Twenty international locations were opened during the first quarter of 2013, bringing the count to 128 stores. ColorTyme, which is a wholly owned subsidiary of Rent-A-Center, added 3 new locations and closed 3 locations, with the total store count remaining at 224.

For 2013, management plans to open approximately 60 rent-to-own locations in Mexico. Moreover, the company aims at about 425 domestic RAC Acceptance kiosk additions.

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, Rent-A-Center holds a Zacks Rank #3 (Hold). Other stocks worth considering are G-III Apparel Group, Ltd. (GIII) and Michael Kors Holdings Limited (KORS), both of which hold a Zacks Rank #2 (Buy).

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