Rent-to-own News - Loudermilk on Bloomberg: RTO flexibility wins new customers in recession
December 27, 2008
Aaron Rents CEO Robin Loudermilk Jr. appeared yesterday on Bloomberg TV to field questions about his company's impressive performance in an economy that is forcing traditional retail to its knees.
Aaron's posted a 16 percent growth in revenue in the third quarter and Loudermilk said he's surprised at just how strong the company's fourth quarter showing has been. As the economy remains tumultuous, new consumers are seeking the flexibility of rent-to-own he said.
"It's been very strong," Loudermilk said. "We count customers every week and every week we've been gaining customers with flat TVs and laptop computers. People are coming in and leasing products from us because of the flexibility they have. It's very uncertain times but I believe our business thrives in that."
Though new customers, such as those who have lost their homes due to foreclosures and are now renting, are coming through Aaron's doors, Loudermilk explained the typical Aaron's customer is not affected by macro economic circumstances.
"Our customer is always cash and credit constrained it doesn't matter in good economies or bad economies," Loudermilk said. "I don't think these times affect the core group of our customers its just putting more people into our customer window if you will.'"
Every week Aaron's has been gaining customers with its offering of flat-panel tv's and laptop computers, Loudermilk said, and lease renewal rates are stronger than ever.
He explained that approximately 85 percent of Aaron's customers live in rental housing and those who don't renew their leases are moving. Add to that rising unemployment rates and layoffs and a level of uncertainty that demands flexibility becomes apparent, Loudermilk said.
"More so today, people are looking for flexibility. We are providing the basic necessities for these people who are uncertain where they're going to be six months from now."
Aaron's sold its corporate furnishings division to CORT in September and purchased its second largest franchise, Rosey Rentals, two weeks ago. The moves should help position Aaron's to add the 90 to 150 stores Loudermilk hopes to open in 2009.
"We'll open somewhere between six and 10 percent of store base both company and franchise stores," Loudermilk said. "We were on about a 17 percent tear for the past three or four years and what we've chosen to do is pull back a little bit and catch our breath from a management side. We're very bullish. We think we can have 2,500 to 3,000 stores."
Aaron Rents, based in Atlanta, currently has more than 1,535 Company-operated and franchised stores in 48 states and Canada. It is the second largest rent-to-own company in the world behind Rent-A-Center which operates over 3,000 company owned stores.
Watch interview.
mevans@rtohq.org
About APRO
The Association of Progressive Rental Organizations is the official voice of the rent-to-own industry and the most accurate and trustworthy source of rent-to-own news in the industry. Founded in 1980, APRO is the national, nonprofit trade association advocating and representing the rent-to-own industry before the U.S. Congress, state legislatures, courts, media and the public.
For more information, visit www.rtohq.org.
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