Rental Viewpoint | October 20, 2005

relief

Buddy's sponsors Florida
Missing Children's Week
++Buddy's Home Furnishings continues its charitable outreach with its annual sponsorship of Florida Missing Children's Week. Jody Katz, Buddy's sales coordinator and the 2004 recipient of APRO's Employee of the Year award, helped coordinate a week full of activities that culminated into a walk to the governor's mansion in Tallahassee, Florida, on behalf of the Child Protection Education of America (CPEA). The CPEA is a foundation dedicated to finding missing and exploited children and educating the public on child safety issues.
++The week-long event began at Buddy's Home Furnishings in its hometown of Tampa, Florida, where more than 2,200 people attended fingerprinting events and child safety demonstrations. The gathering featured members of the Tampa Bay Buccaneers, World Wrestling Entertainment and demonstrations regarding child safety and abduction provided by more than 15 law enforcement agencies.
++Recently, the Florida Highway Patrol officially endorsed the campaign and plans to participate in each event Buddy's sponsors throughout Florida. Katz has also been elected CPEA president as a result of his effort.
++"When we started, we couldn't get a law official to call us back. Now, they're asking for bleachers because they know so many people show up," says Katz. "I challenge every rent-to-own company in America to create the same community-driven spirit Buddy's has created through our sponsorship."
++This marks the third year Buddy's Home Furnishings has sponsored Florida Missing Children's Week.

Whirlpool receives 2005
Business Ethics Award
++Whirlpool Corp. has received the 2005 American Business Ethics Award from the Society of Financial Service Professionals (FSP). The society established the award in 1994 to honor companies that exemplify high standards of ethical behavior in their everyday business conduct and in response to specific crises or challenges.
++Whirlpool embraced its responsibility to conduct business in an ethical manner nearly 100 years ago with its first major order. When 100 motor-driven, wringer washers were delivered to a new customer and a component failed, Whirlpool co-founder Lou Upton found a way to replace the defective part and, in doing so, doubled the order to 200 washers. This anecdote underscores Whirlpool's philosophy that doing right is the right thing to do.
++"Throughout the years, Whirlpool has built a culture of doing the right thing based on living up to our commitment to stakeholders and by quietly working behind the scenes to strengthen the economic and social fabric of the communities in which we operate," says Jeff M. Fettig, Whirlpool's chairman, president and CEO.
++This commitment is demonstrated by the company's effort to bring meaningful, sustainable change to its headquarters community of Benton Harbor through programs that encompass affordable housing, safety, health care and youth opportunities. Globally, Whirlpool made a five-year, $25 million commitment in 2000 to Habitat for Humanity International and has extended that partnership globally for years to come.
++As an employer, Whirlpool maintains a strong focus on diversity and was a pioneer in the establishment of a confidential ethics hotline in 1993. In addition, the company offers a comprehensive ethics program that incorporates a wide range of internal communication vehicles, training programs, employee surveys and leadership assessments.
++In its demonstration of ethical behavior to shareholders, Whirlpool is compliant with the Sarbanes-Oxley Act and has established multiple internal control and audit groups. Whirlpool also actively participates in the Energy Star program and has been recognized repeatedly for its energy saving initiatives in both its product innovations and its commitment to reduce the company's global greenhouse emissions.
++The company was nominated for the award by the Southwestern Michigan chapter of the Society of FSP and by Mike Damschroder, a member of the chapter's board of directors.
++The awards are presented in three categories: large companies (more than 2,500 employees), midsize companies (250-2,500 employees) and small companies (under 250 employees). Whirlpool received the award in the large company category; Paetec Communications received the award for the midsize company and Schloegel Design Remodel received the small company award.

Aaron Rents sues Primetime Rentals
for trademark infringement
++A Roanoke-based rent-to-own company was sued in federal court this week by a competitor who alleges its trademark slogans and logos were ripped off.
++Among other things, Aaron Investment and Aaron Rents allege that Primetime Rentals stole their slogan "Do the Math" and turned it into "Really Do the Math." Aaron Investment, which is based in Delaware but operates three stores in Roanoke and the New River Valley, is claiming unfair competition, trademark infringement and false advertising.
++Stephen Athanson, general counsel for ABC Television and Appliance Rental, the parent company of Primetime, says the company was just served with the lawsuit on Monday and was not yet prepared to respond. ABC Television and Appliance Rental is based in northeast Roanoke and operates 30 Primetime stores in Virginia, North Carolina, Maryland and West Virginia, according to Primetime Vice President Kendall Austin.
++"Do the Math" is a phrase owned by Aaron Investment, as are the phrases "Aaron's Sales and Lease Ownership for Less" and the term "Dream Machine," in reference to appliances offered for sale or lease by its stores, the lawsuit states.
++Primetime Rentals is accused of using slogans that are "confusingly similar," such as "Really Do the Math" and "Sales and Lease Purchase for Less," says Stephen Schaetzel, an Atlanta attorney representing Aaron Investment. Primetime has also used "Dream Machine" to describe its appliances, the lawsuit states.
++In addition, Aaron Investment claims in the lawsuit that Primetime Rentals has misstated Aaron's prices and used a circular logo that copies its "Own It" design. The plaintiffs have not asked for a specific amount in damages, but under federal trademark infringement law, violators can be ordered to pay triple the amount of lost profits.
++Along with the lawsuit, Aaron Investment and Aaron Rents filed a motion for a preliminary injunction that would restrain Primetime Rentals from using any phrases or logos similar to theirs. The injunction also requests that Primetime be compelled to deliver all products, bags, boxes, signs and other items that infringe on Aaron's copyright so that those items can be destroyed. No ruling has yet been made on that motion.
++Athanson said ABC Television and Appliance Rental will respond to the lawsuit soon.
Story courtesy of the Roanoke Times.

Rent-to-own remains a
small business enterprise
++The rent-to-own industry was spurred into the U.S. marketplace through the entrepreneurial spirit of small business. Throughout the decades, though, the industry has evolved from a group of independent small business owners to an almost even split between corporate rent-to-own and small business rent-to-own.
++Today, the ratio is 51 percent corporate rent-to-own reflecting three public companies—Aaron's, RentWay and Rent-A-Center—and 49 percent independent small business rent-to-own reflecting approximately 2,300 separate companies. The current corporate growth of the industry is an eight percent rise from 1999 when the public company corporate rent-to-own industry was split 43 percent corporate and 57 percent independent. In the five years following 1999, RTO public companies engaged in an aggressive acquisition campaign that ended when Rent-A-Center purchased Rainbow Rentals in May 2004. However, with the recent consolidation of the corporate rent-to-own industry, a new phase of small business owners and store openings into the rent-to-own industry has emerged.
++"The introduction of rent-to-own companies on Wall Street does add a new aggressive acquisition component to the growth and look of our industry," says APRO Executive Director Bill Keese. "But according to recent statistics, heavy acquisitions lead to an influx of new, independent small business operators coming into the business. And it is the independent, small-business spirit that still drives this industry to continually improve, evolve and innovate the rent-to-own industry to better serve their customers."
Small business chart

Whirlpool sales set third-quarter record
++Whirlpool announced third-quarter 2005 net earnings of $114 million, or $1.66 per diluted share, compared to $101 million, or $1.50 per diluted share, in the same period last year. Net sales of $3.6 billion increased 9 percent from last year and represented a third-quarter record. Excluding currency translations, net sales increased by approximately 6 percent.
++"Our third-quarter operating profit, which included approximately $110 million of higher material and oil-related costs, improved versus last year. The combination of actions we began implementing last year to address the significantly higher material and oil-related cost environment have proven to be effective," says Jeff M. Fettig, Whirlpool's chairman, president and chief executive officer. "These actions included driving higher levels of controllable productivity, leveraging our global operating platform, reducing non-product related spending, accelerating the rate of innovation to the market and implementing cost-based price adjustments."
++Results for the company's third quarter in comparison to last year were negatively impacted by higher material and-oil related costs, incentive compensation expense, unfavorable currency and increased restructuring costs. The impact from global cost-based price adjustments, productivity improvements and cost-control initiatives all helped offset these higher costs. On a year-to-date basis, sales increased to a record $10.4 billion, up 8 percent from the prior-year period. Excluding currency translations, sales increased approximately 5 percent. Net earnings of $296 million declined 4 percent, primarily attributable to higher material and oil-related costs of approximately $480 million.

Designer purses at rent-to-own prices
++Meghan Doyle attracts a lot of attention walking around campus with an authentic Louis Vuitton Papillon bag. The 19-year-old freshman at Wheaton College acknowledges that this caliber of handbag, which retails for more than $500, is not exactly a wardrobe staple for the average college student.
++Doyle also turned heads last month with a Chanel purse. ''People are always coming up to me and commenting on the bags, asking me if they're real," she says.
++Yes, they're real, Doyle tells them. They're also rented.
++In the age of new luxury where some people would forgo a month's rent for the new Chloe Paddington bag, retail analysts say there is a burgeoning group of middle-class Americans who are indulging a yen for high-end fashion with small compromises; they pair H&M with Hermes, wear their Tiffany bracelets to Target and rent their designer handbags. Companies such as Bag Borrow or Steal and From Bags to Riches are catering to fashionistas who lack the disposable income to satisfy their cravings for Coach satchels and Chanel clutches, but for whom carrying a cheaper knockoff is blasphemy.
++Services to rent luxury automobiles and designer wedding dresses already exist and analysts predict more such companies may sprout up if interest in high-end products continues.
++Bag Borrow or Steal is an online company that works like a Netflix for handbags: customers pay a monthly fee for access to a collection of authentic designer handbags. Members may borrow the bag for as long as they like and when they're ready for a change they can go online and order another. The company also offers the option to buy the bag at a discounted price determined by the bag's age and condition.
++Instead of charging a membership fee, From Bags to Riches, another online company, allows customers to rent handbags on a weekly or monthly basis. The rentals range from $19.90 to $72.90 a month and vary by collection. From Bags to Riches also offers an option to buy the bag, with a percentage of each rental going toward the final cost.
++Both companies require customers to maintain the bag's original condition but do clean and shine the items again before renting them back out. The companies also allow customers to purchase insurance to cover the cost of damaged bags, but the insurance does not cover theft. Once bags are retired, the companies relegate them to a bargain bin, where members and customers can buy them at a hefty discount.
++Rental companies are attracting such customers in throngs, according to Michael Smith, CEO of Bag Borrow or Steal. ''We're creating an entirely new market. We're granting access to designers that many people would not have had access to before," he says.
Reprinted from the Boston Globe. To view the complete story please click here.

Premier opens three stores
across the nation
++Three Premier Rental Purchase stores held grand openings this month in three different states. Premier franchisees opened new stores in Missouri, New York and Texas.
++After 20-plus years working in the rent-to-own industry, Dave Reed of Joplin, Missouri, decided the time was right to open his first rental purchase store. "After checking around and comparing what was being offered, it was an easy decision to choose Premier," says Reed. "They offer a vehicle while I supply the gas. The lower fees, a great support network and very few constraints are allowing me to do what I want, when I want." Although his experience included nearly all aspects of running an RTO store, Reed found that having Premier's three-year budget process already formatted made it easier to get started. Reed opened his Premier Rental Purchase store in Joplin.
++San Antonio's Trinidad "Trini" Rubio was at an RTO convention last year when he happened to speak to Premier President and CEO Trooper Earle. As a market manager for more than eight Rent-A-Center stores, Rubio had thought about putting his 15 years of industry experience to work in his own business. "I reviewed and researched other options on the market and came to the conclusion that Premier was the best vehicle to help me realize my long-term business goals." Rubio's first Premier Rental Purchase store opened in San Antonio, Texas.
++After 18 years in the RTO business, Richard Vadnais decided to take the plunge and open his Premier store in Syracuse, New York. "I've been thinking about this for many years, like others in the business. I've found that the corporate structure is not for me," says Vadnais. Vadnais found that Premier offered the flexibility he was looking for with the support he needed to get underway with his store. "It's Trooper's vision, fairness and flexibility that helped me make my decision to go out on my own and to go with Premier. He is a good leader in the industry," says Vadnais.

High Point Furniture Market, October 20-26, High Point, NC, 336/888-3700
SEMA (Specialty Equipment Market Association), November 1-4, Las Vegas, NV, 909/396-0289
Texas Association of Rental Agencies' Situational Leadership Seminar, November 9,
Shreveport, Louisiana, 817/539-0500
PLEASE NOTE: Nationwide/Rent Direct's Prime Time convention is now scheduled for February 26 through March 1, 2006, and will be held in Las Vegas at the Venetian Hotel. The show was originally scheduled for February 15-18 in New Orleans, Louisiana. Due to Hurricane Katrina, the location and dates have changed.
Click here to view the APROVision industry calendar of events

Calling Indiana rental dealers
++Indiana state rental dealers are invited to plan for the future of the Indiana Rental-Purchase Dealers Association (IRPDA). The state association will host officer elections and future planning at 10 a.m., November 3 at the Indianapolis Holiday Inn at 2501 South High School Rd. Indiana dealers who are interested in Indiana's rent-to-own future and how IRPDA can best serve the industry's needs are encouraged to attend. If you have questions or need more information, call Terri Chapman at 765/622-9500.

++As part of our ongoing effort to recognize Rental Training Online students, here is a list of students who took courses in September 2005:
graduate Melissa Chick, Michael Janssen, John Warren and Georgia Willis of A Full House; Randy Abbe, Cody Biggs, Shelley Kimpton and Rogar Mast of Alliance Rental Center; Connie Johnson and Laceecee Pogue of Baber's Inc.; Allen Dial and Carmelo Torres of Dial Rent To Own; Betty Bolton, Ronnie DeMoss, Tina Ferguson, Connie Poteete, Debbie Smith and Tracy Snow of Full-O-Pep/American Rental; Robert Morris of Appliance & Furniture RentAll; Randy Cornwell and Robert Griffin of Hometown Brand Center; Adam Haseley, Erick Rosenberger and Robert Wilson of House of Television Rentals; EJ Brendt, Angelique James, John Richardson, Mike Rico and Nickalos Yates of KLQ/Quality Rentals; Tony Barrow, Rogelio Gonzalez, Ray Jones and Hector Pevia of Rent City; Ralph Trezza of RTO Inc./Best-Way Rentals; Jesse Hall of SKC/Rent One; Janet Walker and Nicholas Wright of STAR Rentals and Fabio Olivo of Z-Best Rentals.

Visit the APRO Web site or call the APRO office at 800/204-2776.

October 20, 2005
Volume 4, Issue 21

PUBLISHED BY APRO
1504 ROBIN HOOD TRAIL
AUSTIN, TX 78703
800.204.2776
APROVISION.ORG

» Rent-to-own store and others acquire new tenant

» RTO industry pushes measure that would ease rules on repossession, posting of rates

» RentDirect group eyes independent RTO stores

» Wisconsin Legislature looking at new RTO law

» Rent-A-Center cited in economics article

Have a question or concern? Call APRO at 800/204-2776; or e-mail Shellie Faught.

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