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Rent A Center Gives Hope to Thousands
A lesson in Corporate Citizenship

• WOW!...Way to go RAC
  RTO Online Response: We were so impressed by RAC's leadership in locating missing kids...we developed a system of our own
   
• I never realized how many missing kids there are. I honor what Rent A Center is doing but I am saddened that such a massive effort is necessary. We are developing a website now and will add the NCMEC banners. Please pass on my congratulations to Ann and Chris.
  RTO Online Response: Thank you so much for doing your part to help locate missing children. As a result of your effort, awareness will be raised and, God willing, a missing child will be found. That is the best return on investment you'll ever get.

RTO Around the Globe
RTO Enterprises
Our Neighbors to the North

• Helpful
  Very Interesting article, I hope to hear more about our Canadian friends
  RTO Online Response: Merci. C'est toujours une expérience d'étude pour voir les différences, et des similitudes, des comapanies de location d'achat dans des pays de foriegn.
   
• I have tears of joy
  Some amazing similarities to the history of some US Rent to Own companies
  RTO Online Response: Just goes to show that human nature and ambition knows no nationality.
   

Ten things you tell your customers without moving your lips

• Better than War and Peace
  Excellent! This will be printed and hung in the store for all employees to review and remember
  RTO Online Response: Thank you! It is an honor to serve.
   
• Better than War and Peace
  Great article, all to often we forget what we are here to do and what the customer is there to do.  I will pass this along to my crew as a refresher. Thanks!
  RTO Online Response: Never hurts to remember who really buys our groceries.
  
• Better than War and Peace
  It's the truth. I am a __________ for Rent a Center. Most of my meetings are based on things I have read from this site.  Please send more of the same. I am a long time visitor.
  RTO Online Response: We will be profiling various Rent to Own companies in several countries. One of the focus areas will be 'Customer service'. Articles should begin within 2 weeks.
   
• Just OK
  What's the state of our industry that we have to talk about cleanliness, full stock, courtesy and price disclosures as "silent salesmen" or little pluses that can make a store better? Isn't this like McDonald's announcing a new program: hot burgers. If there's anybody not doing these things already, it's unlikely they're reading this either. They're at the golf course, in court, or in the projects trying to repo and/or sell.
  RTO Online Response: McDonalds became the best at what they do by constantly focusing on the little things. Anybody can make a burger...it's the little things that make it a "Big Mac". By the same token, anyone can open a Rent to Own. It's the little things that will set you above the rest.
  
   

Rent Way, Calm Waters
and other news...

We are receiving a record number of comments for this newsletter...we will post a representative sample here.

• Just OK
  Here's what RWY gains: $25million they'd otherwise not have and which is desperately needed to buy merchandise. Morgenstern doesn't mind giving up 15% because he's never held more than 8% himself. From his standpoint - and that of his board - it's a "Plus" deal all the way. Strong is a value seeker - that is, they've long sought stocks that are cheap with great upside potential. They've bought several rto stocks in the past. Their hedge in this case is that huge discount. In a sense, they've already achieved their upside. RWY stock is coat tailing on RCII -- it's not hard to figure out who the potential acquiror and the potential acquiree (target) is here. If the acquiror has a $50+ stock and the target is under $10 - what a buy for some forward-looking investor. And if you can't buy a substantial block of that $50 stock (which is undervalued, by the way) then you buy shares in the target.
  Wasn't it all much more simple when we just had to rent and collect?
  RTO Online Response: Thank You for the thoughtful comment...more to follow
  
   
• Worthless
  "No Comment Attached"
  RTO Online Response: We are always willing to learn. Please send along a comment or response and we will gladly post it.
   
• Better than War and Peace
  This is the kind of honest reporting that is absolutely necessary for true analysis.
  RTO Online Response: Thanks Mom
   
• I have tears of joy
  3 million in one day for signing your name...how do I join this club?
  RTO Online Response: Actually, Calm Waters did have to write a 6 million dollar check...but you are right it was an amazing return.
   
• Helpful
  I bought and held RWY stock 2 years ago *$%^^%# this guy makes $3 a share in a day.
  NOTE: RTO Online has learned  that Calm Waters must retain their shares until Rent Way registers the shares. Rent Way is in control of when the shares are registered.
   
• Just OK
  Re your question concerning RWY's viability as buyout target considering their debt.
  Apart from the thoughtful and close scrutiny any such deal would attract from regulators and legislators, look at the parallels with the airline industry: the worst-managed airline (not to say RWY is the worst-managed rto company, but...) has one valuable asset that all competitors bid heavily for: its gates. They provide instant access to customers you don't now have.
  
  RWY's gates are its storefronts that customers walk into every day. Nobody's going to buy RWY so they can own a boatload of used appliances and beat-up furniture. There has to be a realizable opportunity in satisfying the pent up demand of those customers.
  A close analysis has to be made to determine whether the application of store level (operating) cash flow to existing debt would effectively reduce the cost of the deal to a qualified buyer. If the resultant debt, plus the initial cash outlay, meets the test and allows additive earnings, then it's a candidate for a strong buyer (no pun intended). And the shareholders would get a more attractive stock in a better company.
  
  RWY no doubt has covenants in its loan packages that prohibit selling off part of the assets to save the rest. It's all or none. They have to maintain a certain ratio of debt to revenue and that's impossible if you sell off assets for what's owed against them. There's not enough proceeds from the sale to reduce debt on the remaining stores to a manageable level. Nothing gets better. And morale gets worse because employees know you're selling off and they start bailing out.
  
  At this stage, RWY's survival depends on changing the business model that has already proved it doesn't work. Observers say their problems stem from that little accounting hiccup, and they'll recover soon. Such myopic thinking ignores the fact that, if everything had been fine, the boys in the backroom wouldn't have felt compelled to cook the books in the first place. The same strategy that didn't work then won't work now. And the problem is that none of the board is apparently willing to pull the trigger.

Wow...What a
"Rent to Own Week"

• I have tears of joy
  The event calendar is great! How do I add an event?
  RTO Online Response: Submit all events to events@rtoonline.com
   
• I have tears of joy
  Who writes your articles?
  RTO Online Response: Our articles are written by RTO Online Staff and other contributors. All contributors are current or retired RTO professionals.