Elijah Grant
Rent-A-Center is an American rent-to-own company that offers furniture, appliances, computers, electronics, and tires. The company has been facing challenges in recent years, including revenue declines, negative rumours about layoffs, and a difficult economic environment that has impacted its customers. In 2023, Rent-A-Center rebranded itself as Upbound Group Inc., a unified, multi-brand platform company, and continues to open new franchise stores. However, it also announced plans to close 280 stores, raising questions about its future prospects.
| Characteristics | Values |
|---|---|
| Rebranding | Rebranded as Upbound Group Inc. in February 2023 |
| Business Model | Rent-to-own |
| Business Type | American public furniture and electronics company |
| Business Size | 2,400 company-branded retail units |
| Business Locations | United States, Mexico, Puerto Rico |
| Business Performance | Revenue declines year after year |
| Business Challenges | Competition from Walley World, toxic work culture, credit numbers are out of control, delinquencies, loss rates, etc. |
| Business Opportunities | Inflation has hit customers hard, and rent-to-own and lease-to-own can be a lifesaver for those with lower incomes and poor to no credit |
| Business Strategy | Focus on digital transformation and omni-channel platform, franchise model, flexible leasing, no long-term contracts, no penalty for returns, upgrade options, no credit option |
| Business Restructuring | Closed 280 stores in 2007, acquired Merchants Preferred in 2019, acquired Acima Holdings in 2021, consolidated brands in 2023 |
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What You'll Learn
Rent-A-Center's rebrand and new business model
Rent-A-Center, Inc. has recently undergone a rebrand and change in business model. The company, founded in 1973, has been facing financial difficulties, with rumours of layoffs, toxic workplace culture, and declining revenues. In 2023, Rent-A-Center announced its new identity as Upbound Group, Inc., a multi-brand platform company with a mission to elevate financial opportunities for all.
The rebrand includes the consolidation of several brands, including the previously acquired Acima Holdings, Acceptance Now, and Merchants Preferred. Upbound Group aims to provide more inclusive financial solutions, particularly targeting underserved consumers who lack traditional credit options. This shift reflects the increasing digitisation of the company and the challenges of the economic climate, which have impacted Rent-A-Center's core customer base.
The new business model focuses on flexible leasing and rent-to-own options for high-quality furniture, appliances, electronics, and computers. Customers can choose from various top brands and enjoy benefits such as no long-term contracts, upgrade options, and inclusive "No Credit Options". The company's omni-channel platform offers over 2,400 company-branded retail units and a growing digital presence.
Despite the challenges, Rent-A-Center's CFO, Fahmi Karam, expressed optimism about the company's future. He acknowledged the impact of inflation on their customers but noted that losses and delinquencies were returning to more normal levels. The company's debt portfolio has also improved since the third quarter of 2021, and they continue to open new franchise stores, signalling ongoing growth.
Rent-A-Center's evolution into Upbound Group, Inc. represents a strategic shift towards a more unified, innovative, and consumer-centric approach. By embracing a new brand identity and business model, the company aims to better serve its customers and adapt to the changing market landscape.
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Rent-A-Center store closures
Rent-A-Center, the American rent-to-own furniture and electronics company, has been facing some challenges in recent years. In December 2007, the company announced plans to close approximately 280 stores, resulting in pretax restructuring charges of $36-43 million. This move was expected to eventually lead to a pretax monthly operating income benefit of $2.0-2.5 million.
More recently, in February 2023, Rent-A-Center, Inc. changed its corporate name to Upbound Group, Inc. This rebrand is part of the company's effort to position itself as a unified, multi-brand platform company, offering more inclusive financial solutions. The company now operates under the Upbound Group umbrella, which includes brands such as Acima and Acceptance Now.
The decision to rebrand and consolidate multiple brands under the Upbound name was likely influenced by the challenges Rent-A-Center has faced due to the pandemic, inflation, and increasing digitalization. In a conversation with PYMNTS, Rent-A-Center CFO Fahmi Karam acknowledged the impact of inflation on their core customers, who typically have lower incomes and limited access to traditional credit options.
While there is no indication that Rent-A-Center is going out of business, the company has experienced revenue declines and has had to adjust to changing consumer behaviours and market conditions. There have also been mentions of layoffs and cost-cutting measures, with some sources suggesting a shift towards "automation" and a potential focus on non-U.S. markets.
Despite these challenges, Rent-A-Center continues to expand with new franchise stores opening in locations such as Harlan, Kentucky, and Dania Beach, Florida. The company is adapting to the digital transformation and remains committed to elevating financial opportunities for its customers through its lease-to-own options.
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Rent-A-Center's financial losses
Rent-A-Center, a 50-year-old lease-to-own retail channel, has been facing financial losses and challenges in recent years. In 2007, the company announced plans to close approximately 280 stores, resulting in expected pre-tax restructuring charges of $36-43 million. The company anticipated a pre-tax monthly operating income benefit of $2.0-2.5 million following the restructuring.
The COVID-19 pandemic and economic conditions have also impacted Rent-A-Center's financial performance. The company experienced early pandemic-related losses, with their debt portfolio normalizing in the third quarter of 2021 and even peaking above normal in 2022. Inflation has hit their customers hard, resulting in increased delinquencies and loss rates.
In February 2023, Rent-A-Center, Inc. changed its corporate name to Upbound Group, Inc., consolidating several brands, including the previously acquired Acima Holdings. This rebrand is part of their strategy to offer more inclusive financial solutions and address the changing needs of consumers.
To cut costs, there have been rumors of potential layoffs, particularly affecting US employees and remote workers. The company has also been criticized for its toxic work environment, with high employee turnover.
Despite these challenges, Rent-A-Center continues to expand, opening new franchise stores and unveiling new integrated retail partner offerings, such as Preferred Lease. The company has a strong presence in the rent-to-own market, with over 2,400 stores and a diverse range of products and services.
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Rent-A-Center's customer base
Rent-A-Center (RAC) is an American rent-to-own company that provides new and used brand-name furniture, appliances, computers, electronics, and wheels and tires. The company was founded in 1973 and is based in Plano, Texas. As of 2014, it operates approximately 2,972 company-owned stores in the United States, Puerto Rico, and Mexico, with 35% of the US rent-to-own market share based on store count.
RAC's customers are typically people who do not have traditional credit and cannot get traditional loans or credit cards. They tend to have a lower income and often work in the service industry, with an annual household income of around $50,000.
The company's business model offers small initial payments and no long-term obligations. Customers can return items at any time without penalty and have the option to re-rent the same item and pick up payments where they left off. Delivery, pick-up, service, and repair are included in the rental price.
RAC has seen a significant shift towards digital, with almost a quarter of its business starting online. The company has also expanded its offerings to include lease-to-own options through its acquisition of Acima in 2020 and the launch of the Upbound Group holding company.
While RAC has faced some challenges, including class-action lawsuits and negative perceptions of its business practices, it continues to serve its customer base of lower-income individuals seeking flexible payment options for name-brand products.
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Rent-A-Center's corporate culture
Rent-A-Center, now known as Upbound Group, Inc., is an American public furniture and electronics company with a rent-to-own business model. The company was founded in 1973 and has been through several changes and acquisitions over the years.
The corporate culture at Rent-A-Center has been described as toxic by some, with frequent mentions of employees quitting and low morale. There have also been rumours of layoffs and cost-cutting measures, particularly in relation to labour. The company has also faced legal issues, including a $13 million settlement in California for improper add-on freight charges.
On the other hand, Rent-A-Center has also been recognised for its innovative and inclusive financial solutions. The company serves customers who typically don't have traditional credit options and provides flexible leasing options. The company has also adapted to the digital transformation, with almost a quarter of their business now starting digitally.
In terms of their corporate structure, Rent-A-Center has a multi-brand platform with several operating units, including Rent-A-Center and Acima. The company has over 2,400 stores across the United States, Mexico, and Puerto Rico. Their headquarters are in Plano, Texas, and include amenities such as a fitness centre, game room, and lunchroom.
Overall, Rent-A-Center's corporate culture appears to be facing challenges with low morale and potential layoffs, but the company is also recognised for its innovative financial solutions and commitment to serving underserved consumers.
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Frequently asked questions
No, Rent-A-Center is not going out of business. In 2023, Rent-A-Center Inc. changed its corporate name to Upbound Group Inc. and consolidated several brands from their acquisition of Acima Holdings.
Upbound Group Inc. is a unified, multi-brand platform company that includes more than just the Rent-A-Center business. It is committed to elevating financial opportunities for all through innovative, inclusive, and technology-driven financial solutions.
Rent-A-Center is an American public furniture and electronics company that operates on a rent-to-own business model. Customers can rent items with small initial payments and no long-term obligations. They can return an item at any time without penalty and even re-rent the same item.
In 2007, Rent-A-Center announced plans to close approximately 280 stores and expected to incur pre-tax restructuring charges of $36 million to $43 million. However, there is no recent information on store closures.
Rent-A-Center has faced challenges due to the pandemic and competition from other retailers. There have been reports of layoffs, cost-cutting measures, and concerns about declining revenue and delinquencies. However, the company has also seen positive developments, such as a growing digital presence, and a rebrand that positions it for long-term growth.
