Rent-A-Center announced a significant reduction in headcount and provided a number of business updates pertaining to its recently announced strategic plan and its board of directors’ ongoing review of strategic and financial alternatives.
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The company’s strategic plan is focused on driving growth and profitability by reducing costs and enhancing the customer value proposition.
Accordingly, Rent-A-Center announced it is reducing its headcount by approximately 250 positions, representing approximately 25% of its corporate office workforce in Plano, Texas.
This initiative is intended to better align the company’s organizational structure with its operations under its strategic plan to drive $65 million to $85 million of annualized cost savings opportunities.
The headcount reduction, along with related G&A, is expected to generate approximately $28 million in annual run-rate cost savings with approximately $20 million realized in 2018. The company expects to incur employee severance charges and other one-time costs relating to these workforce reductions of approximately $3 million in the first quarter of 2018.
The headcount reduction follows the recent elimination of Rent-A-Center’s Chief Operating Officer position, as disclosed on February 28, 2018. The elimination of that position is intended to bring the overall operations of the company under the direct control of Mitch Fadel, Rent-A-Center’s Chief Executive Officer.
As the company realizes cost-savings opportunities, Rent-A-Center remains focused on driving revenue through a more targeted value proposition and customer focus and has recently rehired Ann Davids in the Chief Marketing Officer role.
With respect to 2018 efforts to date, company same store sales continued to improve sequentially, with January and February same store sales representing the strongest months since February of 2016. In addition, Core U.S. pricing changes, a key part of the company’s growth strategy, are set to take effect tomorrow.
Finally, in order to clarify incorrect information in the marketplace, the company reconfirmed that its Board is continuing its review of strategic and financial alternatives to maximize stockholder value, including evaluating a sale of the company.
The company has received proposals from bidders interested in acquiring the company and the Board and its advisors remain actively engaged with these parties. The Board currently expects to reach a determination with respect to whether to pursue a sale of the company during the second quarter 2018, and does not intend to provide further updates on that part of its strategic review. ■