"This year we went to battle and won back a lot of market
share we lost last year"
"The business we lost last year was not because customers
chose not to do business with Rent Way, [it was because], they
came into the stores and we didn't have the products they were
Rent Way CEO
If you find
yourself in a tunnel and approaching a bright light, are you
A: Dead and well on your way to the "happy renting grounds," or
B: Approaching the successful end of a long and sometimes
dark journey. For Rent Way, the answer appears to be B.
Yes, Rent Way is still in the red (barely). Yes,
RWY stock is far below it's pre-crash highs. No, the
company is not ready to grow...but.
What can only be described as
restrained jubilation was heard in the voices of Rent Way CEO Bill Morgenstern, CFO Bill
McDonnell, and Senior VP Operations Bill Short on the recent
Rent Way earnings
conference call. Company officials spoke of Rent Way's future with more confidence than has been
Erie in a very long time.
|In markets where Rent Way and Rent a Center compete,
Rent Way reports a 23% share vs Rent a Center's 29%. "All
Others" make up 32%
2003 was the first year in Rent Way's history
the company operated all locations under one Brand. According to
CEO Bill Morgenstern, this re-branding and the "We are Family"
ad campaigns were meant to "Separate Rent Way in the sea of
sameness of rent to own dealers and differentiate our brand."
The campaign was evidently successful. Company officials cite
independent surveys that show Rent Way as the #1 recognized
brand in their markets.
In an odd twist of RTO fate, Rent a Center has
agreed to offer Rent Way subsidiary DPI Teleconnect's pre-paid
dial tone in 2000 of it's locations. DPI Teleconnect has been a
slight drag on earnings in recent quarters due primarily to increased
competition in the local dial tone market. This alliance with
big brother RAC will boost DPI's revenue and, should Rent Way
decide to spin off the company, may provide a ready buyer.
Unlike Rent a Center, Rent Way saw no impact on
payouts due to Child Tax Credits. Payouts were flat quarter over
quarter and the company gained 900 customers. Senior VP Ops Bill
Short covered operational results greater detail than in past
|Quarter ending Sept 31
|Potential Weekly Revenue
Potential Weekly Revenue is the total amount due
that week. Rent Way's goal is to collect 87% - 89% of potential
revenue. In the most recent quarter the company averaged 89.1%,
up 1.9% from the same period in 2002.
|Rent Way's average monthly store revenue for the most
recent quarter was $48,400
For the September quarter, deliveries were up
17,000 and returns were down by 14,000.
Charge-offs for the quarter were 3.2% vs 3.3%
for the September quarter last year. For the fiscal year, Rent
Way charged off's averaged 2.9%.
When asked if Rent Way had a list of
underperformers that "might not make it", CEO Bill Morgenstern
replied "There are probably 50 stores that are frustrating us to
Each year, Rent Way surveys customers to find
out "What drives them." The three main drivers are...
Dealing with a name they can trust
Being treated with respect
Friendly people delivering on promises made
|75% of Rent Way agreements are with repeat customers
Rent Way reports that the number of customers
responding "Extremely Satisfied", when asked about the above
drivers, rose to 29% vs 20% in 2002. Rent Way also claims a
higher rate of customer satisfaction than Rent a Center and
HD electronics hit Rent Way stores in September,
DVD Recorders will be added later in the fall, Sears Kenmore is
back in the company's lineup, and Xbox will soon be packaged in
entertainment cabinets designed by Welton.
New store openings are still on hold. CEO
Morgenstern stated flatly "We want to make sure we have command
and control of the 750 stores we operate today."
How things are said is sometimes more telling
than the actual words. Listening to Rent Way's leadership, one
gets the distinct impression that the "attitude" is back.
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