Furniture retailer terminates referral program with appliance partner

Rent-A-Center is taking another step toward repositioning the company for profitability.



The furniture retailer’s Acceptance Now division is terminating its referral agreement with Conn’s Appliances. These accounts consistently underperformed compared to the rest of its ANow portfolio in terms of delinquencies, losses and product returns.



Besides being cash flow negative accounts, they produced higher-than-average volume of returns, which were generally absorbed by Rent-A-Center’s “core stores” located in those associated areas, an issue that adversely impact of inventory levels in these locations, according to the chain.



Conns’ credit policies were applied through its company-owned secondary financing operation — an issue that also impacted the underperformance and quality of ANow customer accounts originating from Conns stores.



ANow currently operates kiosk locations inside certain Conns stores. As a result of the non-renewal of the Referral Agreement, all 115 ANow kiosks will cease operations at the close of business on June 6. The ANow accounts that are currently under the Conns agreement will be merged into and managed by existing ANow or core U.S. locations.



“We recently announced a number of strategic initiatives to move our business forward and reposition Rent-A-Center and Acceptance Now for long-term growth and profitability,” said Mark Speese, Rent-A-Center’s interim CEO.



“This decision advances our goal as we determined it was no longer in the best interests of the company and our stakeholders to renew the agreement as we focus on optimizing and growing the Acceptance Now business,” he added. “We expect these closures will result in an immediate improvement in cash flow in the ANow business beginning in June, and an improvement in ANow’s return on investment for the remainder of 2017. We thank Conns for their partnership and wish them well in the future.”



Going forward, Rent-A-Center remains focused on optimizing and growing the ANow business, and does not expect to terminate any other existing retail partnerships, according to the company.



“Our Acceptance Now stores have consistently delivered best-in-class volume per unit, with our manned model driving five to ten times the volume of approvals than any other model in this space,” Speese said. “We remain committed to working with our current and future partners where the ANow RTO alternative provides a win for the customers, our partners and for the company.”



The termination of the referral agreement comes on the heels of Rent-A-Center’s adoption of a poison pill earlier this week. This is a shareholder rights plan that will protect the retailer from an investor seeking to buy a 15% or higher stake in the company.