Rent-A-Center, Inc. Provides Business Update in Response to COVID-19 Pandemic
“The majority of our
While we experienced favorable trends to start the quarter with January and February trending positively and running approximately 4 percent ahead of last year, March revenues were off by about 5 percent versus last year as national efforts to contain the COVID-19 virus began to be implemented. As compared to the business model of traditional household durable goods retailers, our recurring revenue stream resulted in total revenue for the first quarter increasing versus the year ago period.
Sales have declined as stay at home orders have been implemented, but are now stabilizing. Offsetting some of the pressure on revenue and collections, our customers should benefit from the
The Company has made a number of adjustments to reduce operating expenses, including executive pay reductions, temporarily furloughing employees in stores and at its corporate office, reducing store hours in some cases, and where possible, renegotiating real estate leases. All non-essential operating expenses are being evaluated. In addition, inventory purchases and capital expenditures have been reduced in order to partially offset revenue reductions. We are targeting reductions of more than
While our revenues reflect lower collections activity, we do not expect to see material pressure on skip / stolen losses, as our contracts are leases and unlike a traditional subprime lender, returning the merchandise is always an option for our customers. Additionally, any pressure we do see on skip / stolen losses is reflected as a non-cash write off of inventory when customers stop paying and do not return the merchandise.
The Company ended its first quarter of 2020 with approximately
“The lease to own industry will remain a critical lifeline for millions of Americans that are being impacted by the virus,” said
A lease-to-own industry leader,
Forward Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "predict," "continue," "should," "anticipate," "believe," or “confident,” or the negative thereof or variations thereon or similar terminology. The Company believes that the expectations reflected in such forward-looking statements are accurate. However, there can be no assurance that such expectations will occur. The Company's actual future performance could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to, continued developments with respect to the COVID-19 pandemic and the governmental responses thereto, including their impact on our revenue and overall financial performance and the manner in which we are able to conduct our operations; increases in lease merchandise write-offs and the provision for returns and uncollectible renewal payments in light of the impact of the COVID-19 pandemic; and the COVID-19 pandemic and government responses’ continuing for a prolonged period of time; and the willingness of our lenders to agree to the upsizing of our revolving credit and/or term loan facilities or our ability to satisfy related conditions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
EVP, Chief Financial Officer