The Dallas Morning News
Rent-A-Center CEO returns permanently
Amid shareholder calls for a sale, Speese plans improvements
“Rent-A-Center has a valuable franchise in the enduring rent-to-own industry.” Shawn Badlani, partner at Marcato Capital Management, a San Francisco-based investor that owns 4.9 percent of Rent-A-Center shares
Rent-A-Center’s former chief executive officer Mark Speese is taking back his old job on a permanent basis with a plan to get the Planobased retailer back on track, the company said Monday.
At the same time, a second shareholder joined the chorus for putting Rent-ACenter up for sale.
Speese, 59, is chairman and one of the founders of the largest rent-to-own chain. He’s been interim CEO since January when Robert Davis resigned. Davis had been in the job since February 2014 and blamed technology issues for struggling sales declines.
In February, Engaged Capital, a California-based investment firm that owns 12.9 percent of Rent-A-Center stock said the company should sell itself. Although the company did hire investment banker JPMorgan Chase earlier this year, it has said it’s not pursuing a sale.
On Monday, Rent-ACenter said Engaged Capital wants a “quick flip” sale at a time when shares are trading at multiyear lows. Rent-ACenter called a Engaged Capital’s sale idea “opportunistic” and “self-serving.”
Rent-A-Center’s stock price gained 69 cents, or 7 percent, to close Monday at $10.29 a share. The stock price had been on a two-year decline.
Marcato Capital Management, a San Franciscobased investor that owns 4.9 percent of Rent-A-Center shares, sent a letter to retailer’s board on Monday saying it should “immediately commence a process to review all strategic alternatives, including a sale of the entire company.”
“Rent-A-Center has a valuable franchise in the enduring rent-to-own industry,” said Shawn Badlani, partner at Marcato. But the board has presided over a decline in the share price of 72 percent since the end of 2014. Too cheap to sell RentA-Center said it’s going to “restore growth” and “will continue to evaluate opportunities with the assistance” of advisers.
“The board refutes Engaged Capital’s assertion that a sale of the company represents the value maximizing strategy,” Rent-ACenter said in a document published to its investor relations website on Monday.
Instead, Speese said he plans to upgrade the product mix to include higherend appliances and furniture, add more full-time employees in the stores and better manage credit approvals and accounts. His plan also includes paying more attention to underperforming stores. He also plans to “enhance its customer value proposition and create a clear path to ownership that better reflects the needs of its customers, retention rates and the natural life cycle of products.
The plan includes improvements to how its serves its Acceptance Now retail customers. Rent-A-Center runs credit desks in several national chains including Rooms To Go and Ashley Furniture. Last month Rent-A-Center said it will drop Conn’s when its contract expires. Another customer is going out of business. Indianapolis-based consumer electronics retailer, HHGregg, one of RentA-Center’s Acceptance Now customers, said last week it’s closing all 220 of its stores after failing to find a buyer.