Aaron Rents Shoots for 2,000 Stores Within 3 Years
Aaron Rents will open 150 company-owned and 100 franchised stores in 2007 en route to a goal of 2,000 stores by 2009, said Kenneth Butler, pres.-sales & lease ownership division. The expansion comes as Aaron shifts its focus to freestanding locations from the strip malls that have been its staple. Aaron Rents had 1,241 stores June 30, including 766 company-owned 406 and franchised, plus 59 corporate furnishing and 10 Rimco outlets.
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Starting in the late 1990s, the rent-to-own chain began to move to freestanding, 10,000-sq.-ft. stores, with about 10% not in strip malls, Butler said. Growth -- historically about 15% annually - will be 19% next year, company officials said.
In expanding its franchise program, Aaron Rents will aim at markets with Super Wal-Mart stores, whose demographics fit those of Aaron Rents, CEO Charles Loudermilk said. To spur growth among Aaron franchisees, the chain recently hired a full-time franchise sales rep, assigned to speed expansion in the U.S. and Canada, Butler said. “Most of the people there are our potential customers for items that cost $300 or more,” he said. Stores that have opened near Super Wal-Marts have done “extremely well,” Loudermilk said. Aaron Rents has about 240 franchise stores scheduled to open.
Aaron Rents is focusing on freestanding stores to boost its brand’s profile, Loudermilk said. “The company is profitable and large enough to afford freestanding,” he said: “We get exposure and a lot more revenue when everyone in that smaller town knows exactly where you are.”
Aaron Rents Q2 net income improved to $20.7 million from $16.1 million, as revenue jumped to $321.7 million from $273.1 million on a 9.1% gain in same-store sales, it said. Earnings include a $4.4 million pretax gain on the June 28 sale of 12 stores in P.R. that included 9,600 accounts, company officials said. Also included was a $565,000 pretax gain on sale of Rent-Way stock.
Aaron’s Sales & Lease Ownership Div. Q2 revenue rose to $290.2 million from $241.5 million last year. Aaron’s corporate furnishings div. posted a 9% revenue gain to $31.1 million from $28.5 million a year. Aaron Rents’ franchise operation reported a gain in revenue to $46.4 million from $42.2 million a year earlier.
Aaron’s rival Rent-a-Center bought 18 stores the first 6 months of the year for a combined $21.4 million, it said in a 10-Q filed with the SEC. It opened 19 stores and closed 48, 33 of which were merged with other locations, the chain said. It has added financial services, including check-cashing, to 81 stores, the chain said. RAC expects to finish building a new hq in Plano, Tex., by Q1. RAC bought 15 acres for the new facility in Dec. and began construction a month later, the chain said, noting it bought the land for $5.2 million, with the hq building expected to cost $22.5-$27.5 million. RAC had spent $4.5 million on construction as of June 30. It has a $4.9 million payment left on the lease for its current hq. RAC had 2,749 stores June 30. Its franchise arm, ColorTyme, operates 295 outlets.
RAC is weighing an appeal to the U.S. Supreme Court of a N.J. Supreme Court finding that the chain falls under the same interest caps as other retailers taking installment payments. The appeal must be filed by Oct. 9. The N.J. Supreme Court’s ruling reversed a lower court dismissal of Helda Perez’s suit. She claimed in a suit filed in 2003 that RAC violated N.J. Retail Installment Sales and Consumer Fraud Act, which caps at 30% per year the interest on installment deals. The suit sought to include aggrieved customers back to 1999.