Rent-A-Center Inc
F:RAC
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Rent-A-Center Inc
Rent-A-Center Inc., a leading player in the rent-to-own industry, traces its roots back to 1973, when the idea of renting household goods was still fairly novel. The company carved a niche for itself by offering an alternative path to ownership, especially for consumers who might otherwise struggle due to financial constraints. Rent-A-Center capitalizes on this need by providing furniture, appliances, electronics, and computers through flexible rental agreements, allowing customers to eventually own these products. It operates primarily through a straightforward business model: customers pay weekly, bi-weekly, or monthly payments to lease products and can own them after completing the predetermined lease period. By catering to those who prefer not to use traditional credit options, the company found its footing in a market segment that values flexibility and immediate access.
The profitability of Rent-A-Center hinges on both interest-like returns embedded in rental agreements and the ability to reclaim products if payments default, which can then be refurbished and rented afresh. This cyclical nature of merchandise use ensures multiple revenue streams from a single product. Moreover, the company strategically positions itself in areas where demand for rent-to-own services is robust, often serving lower-to-middle-income neighborhoods. With an operational model that includes brick-and-mortar stores and an e-commerce platform, Rent-A-Center adapts to evolving consumer habits and technological advances. Through acquisitions and partnerships, it has extended its reach and diversified its product offerings, aiming to maintain resilience against economic fluctuations and competitive pressures.
Rent-A-Center Inc., a leading player in the rent-to-own industry, traces its roots back to 1973, when the idea of renting household goods was still fairly novel. The company carved a niche for itself by offering an alternative path to ownership, especially for consumers who might otherwise struggle due to financial constraints. Rent-A-Center capitalizes on this need by providing furniture, appliances, electronics, and computers through flexible rental agreements, allowing customers to eventually own these products. It operates primarily through a straightforward business model: customers pay weekly, bi-weekly, or monthly payments to lease products and can own them after completing the predetermined lease period. By catering to those who prefer not to use traditional credit options, the company found its footing in a market segment that values flexibility and immediate access.
The profitability of Rent-A-Center hinges on both interest-like returns embedded in rental agreements and the ability to reclaim products if payments default, which can then be refurbished and rented afresh. This cyclical nature of merchandise use ensures multiple revenue streams from a single product. Moreover, the company strategically positions itself in areas where demand for rent-to-own services is robust, often serving lower-to-middle-income neighborhoods. With an operational model that includes brick-and-mortar stores and an e-commerce platform, Rent-A-Center adapts to evolving consumer habits and technological advances. Through acquisitions and partnerships, it has extended its reach and diversified its product offerings, aiming to maintain resilience against economic fluctuations and competitive pressures.
Revenue Growth: Upbound Group reported third quarter revenue of $1.16 billion, up 9% year-over-year, driven by strong performance at Acima and the addition of Brigit.
Profitability: Adjusted EBITDA rose 5.7% year-over-year to $123.6 million, with margins pressured by higher losses at Acima.
Brigit Momentum: Brigit delivered 40% revenue growth and 27% subscriber growth, with EBITDA margins above 16%.
Acima Trends: Acima saw its eighth consecutive quarter of GMV growth (up 11%), but margins declined due to higher lease charge-offs and a shift toward lower-margin jewelry leases.
Rent-A-Center Recovery: Rent-A-Center showed sequential improvement, with same-store sales trending towards flat or positive in Q4, supported by operational improvements and inventory management.
Guidance Update: Full-year 2025 revenue guidance is now $4.6–$4.75 billion, adjusted EBITDA $500–$510 million, and non-GAAP EPS $4.05–$4.15.
Risk Management: The company further tightened underwriting at Acima in response to higher losses, which will limit GMV growth in Q4 but is expected to restore targeted loss rates by 2026.
Capital Position: Upbound finished the quarter with $350 million in liquidity and expects $150 million in near-term cash tax savings from new legislation.
