| Type | Public (NASDAQ: RCII) |
|---|---|
| Industry | Home furnishings rental |
| Founded | Wichita, Kansas, USA (1973) |
| Headquarters | Plano, Texas, USA |
| Key people | Mark Speese, Chairman and CEO Mitch Fadel, President and COO Robert D. Davis, CFO, Treasurer Christopher Korst, Executive Vice President Theodore DeMarino, Executive Vice President Ronald DeMoss, General Counsel & Secretary David West, Executive Vice President, Operational Services[1] |
| Products | Provides furniture, electronics and household appliances available under "rent to own" agreements |
| Revenue | 2.752 Billion USD (2009)[2] |
| Employees | 18,000 (2009)[3] |
| Website | www.rentacenter.com |
Rent-A-Center (NASDAQ: RCII) (commonly referred to as RAC, Rent-A-Centre in Canada) is an American public furniture and electronics rent to own company based in Plano, Texas.[4] The company was incorporated in 1986 and as of 2010 operates 3,007 company-owned stores in the United States, Canada, Puerto Rico and Mexico, accounting for 38% of the rent-to-own market in the United States based on store count.[3][4]
Rent-A-Center's operations include 23 retail installment stores called Get It Now (based in Wisconsin); 18 Home Choice stores in Illinois and Minnesota; 18 rent-to-own stores in Canada that go by Rent-A-Centre and Better Living; and 134 RAC Acceptance kiosks housed within retail partner stores. Its subsidiary, ColorTyme Inc., is a national franchiser which has 210 stores in 33 states. The company also offers Rent-A-Center Corporate Leasing which provides businesses with furnishings for short-term employee living arrangements and National Product Service, a merchandise warranty and repair service.[4][5][6] Within 353 Rent-A-Center retail store locations.[7]
In 2009, Fortune Magazine listed Rent-A-Center at number 706 on the Fortune 1000 list of the largest U.S. corporations, based on a composite ranking of revenues, profits, assets market value and other measures.[8] Competitors include Aaron’s, Inc., easyhome, Best Buy Co. Inc., and Wal-Mart Stores.[9]
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The rent-to-own business was started by J. Ernest Talley in Wichita, Kansas during the 1960s when he told customers of his store, Mr. T’s Rental, that they had rented a washer and dryer for a long enough duration that they had paid for it in full and now owned it.[10] Thomas Devlin, a former employee of Mr. T’s rental, recognized the potential of renting name-brand products and partnered with W. Frank Barton and founded the Rent-A-Center brand in Wichita, Kansas in 1973.[11][12]
Mark Speese joined Rent-A-Center in 1979. In 1986, Mr. Speese and a colleague left Rent-A-Center and started a competing business known as Vista Rent-To-Own.[13][14] Ernest Talley then joined Vista Rent-To-Own as Chairman of the Board of Directors in 1989 and remained Chairman through Vista’s transition to Rent-A-Center.[14] In 2001, Talley retired and Speese was appointed as Rent-A-Center’s Chairman and CEO.[15] Vista Rent-To-Own changed its name to Renters Choice, Inc. in December 1993, in connection with the acquisition from DEF Investments, Inc. and certain related entities of an 84 store rent-to-own chain operating in 12 states.[16]
Renters Choice went public on the NASDAQ stock exchange in 1995 under the symbol “RCII.”[17][18] In August 1998, Renters Choice acquired Thorn Americas, Inc., which operated 1,474 stores in 49 states and the District of Columbia under the name “Rent-A-Center.” On December 31, 1998, Renters Choice changed its name to Rent-A-Center, Inc. and began operating all of its stores under the “Rent-A-Center” brand name.[19]
In February 2003, Rent-A-Center acquired 295 stores from Rent-Way, Inc.[20] In March 2004, Rent-A-Center commenced operating in Canada with the acquisition of five stores located in Edmonton and Calgary, Alberta.[21] Later that year in May 2004, Rent-A-Center completed the acquisitions of Rainbow Rentals, Inc. and Rent Rite, Inc.[22] Rent-A-Center completed its acquisition of competitor Rent-Way, Inc. on November 15, 2006, for a price of approximately $600.3 million. At the time of the acquisition, Rent-Way was ranked number three in the rent-to-own industry with 782 stores in 34 states.[23] The Rent-Way store acquisition program brought the store total to 3,535 stores. Given that the acquisition resulted in over-penetration in some markets, Rent-A-Center carried out the closing or merging of 282 stores between 2007 and 2009.[24]
RAC provides new and used brand-named electronics and household furnishings including washers and dryers, refrigerators, televisions, and furniture from brands such as Ashley Furniture, Sony, Toshiba, Whirlpool Corporation, Dell and HP.[4] As part of their rent-to-own business model, Rent-A-Center generally makes its items available with no down payments or long term obligations. Customers can return an item at any time, for any reason, without penalty and also have the option to re-rent the same item and pick up the payments where they left off. Delivery, pick-up, service and repair are also included in the stated rental price. Customers can also upgrade items while they are renting—the payments will change accordingly. The total paid for an item is usually between four to six times the retail value of said item. [25]
In March 2007, the corporate office moved to a new location at 5501 Headquarters Drive, Plano, Texas, in the Legacy Business Park. Construction began on the 175,000-square-foot (16,300 m2) building in January 2006. Employees moved into the building on March 16, 2007. The current headquarters measures three stories and includes structured parking for 400 vehicles, a fitness center, and lunchroom.[26]
Beginning in 2003, the company has made donations to the Big Brothers Big Sisters of America, collected by means of fund raisers held on an annual basis in Rent-A-Center stores, combined with a match from the company up to $100,000. As of April 2010, the cumulative total of this program was reported as being "more than $2 million."[27] Between 2005 and 2010, Rent-A-Center donated and set up 115 “RAC Rooms” at Boys and Girls Clubs of America locations, in which each club selects $5,000 worth of new furniture, electronics and computers for their room.[12] Rent-A-Center has annually allocated $60,000 worth of scholarships to customers and the children of customers and coworkers. Through the Random Acts of Caring initiative, which was launched in 2008, RAC has donated merchandise and funding to charitable organizations located in communities where Rent-A-Center maintains retail locations.[28] The company has been recorded as having supported Junior Achievement with grants to 35 locations to teach financial literacy; and has provided funding to food banks including Feeding America and the North Texas Food Bank.[29][30][31] Rent-A-Center’s “Soup to Nuts” initiative has involved its 3,000 stores acting as collection points for cans of soup, jars of peanut butter and other canned goods which have been subsequently donated to food pantries in the U.S.[32] An initiative begun in 2010 is Rent-A-Center’s Military Donation Program, in which merchandise with a wholesale value of $175,000 is delivered to 10 Army garrisons. Contributions have been allocated to Family & Morale Welfare and Recreation operations that provide community and family services, such as the Soldier and Family Assistance Centers that in turn serve wounded, ill and injured soldiers and their families.[33]
A number of consumer protection concerns have been raised about the rent-to-own industry, including accusations of predatory lending.[34] Consumer advocates believe that rent-to-own transactions such as those offered by Rent-A-Center should be treated as credit sales, and point out that the price of a product can be two or three times the retail price. However, some are quick to note that 73 percent of rent-to-own customers have a high school diploma and all prices are shown on the customer contract. In an April 2000 Federal Trade Commission study on the industry, 75 percent of respondents stated that they were satisfied with their rent-to-own experience. The rent-to-own industry also received an “A” or excellent regarding customer service in a 2009 study conducted by America’s Research Group.[35][36]
In 2000, Rent-A-Center was sued for sexual bias in the hiring of women. The 2002 settlement agreement resulted in a $47 million cash payment by Rent-A-Center and mandated that Rent-A-Center offer 10% of future vacancies over the following 15-month period to women who were found to be past victims of discrimination. The settlement also led Rent-A-Center to seek qualified women to serve on its Board of Directors, develop equal employment training programs, and hire a new human resources vice president to implement hiring policies that ensured equal employment opportunity for female job applicants and current employees.[37][38]
In 2006, Rent-A-Center settled for $7 million in restitution and $750,000 in civil penalties for deceptive business practices in California. The State of California claimed RAC, in violation of state law, engaged in unfair competition and illegally misrepresented the price of certain merchandise. As a result of the settlement, RAC also deposited more than $7 million into a special consumer protection fund that is used to enforce consumer protection laws.[39]
In 2010, seven months after the Washington Attorney General’s Office sued Rent-a-Center and accused the national lease-to-own chain of unfair and deceptive collection practices under Washington’s Consumer Protection Act, Rent-A-Center agreed to settle.[40]
Another prominent case occurring in 2010 included Rent-A-Center vs. Jackson which arose out of an employment discrimination claim brought on by former RAC employee Antonio Jackson. The case went all the way to the Supreme Court, who sided with RAC in a 5-4 decision. The court held that if a company's arbitration agreement includes a clause delegating fairness challenges to the arbitrator, a court must enforce that agreement and send the matter to arbitration. When Jackson first sued, Rent-A-Center cited its arbitration agreement and claimed that any challenges to the agreement had to be decided by the arbitrator.[41]
The Rent-A-Center company converted its Wisconsin stores to Get-It-Now! credit sale outlets after a judicial decision held that the state’s consumer protection laws defining credit sales included rent-to-own businesses.[42][43]