Aaron’s, Inc. operates as a specialty retailer of furniture, consumer electronics, computers, appliances and household accessories. The company’s store-based operations engage in the lease ownership and retail sale of various products, such as flat-screen televisions, computers, tablets, living room, dining room and bedroom furniture, mattresses, washers, dryers and refrigerators. The company’s stores carry brands, such as Samsung, Frigidaire, Hewlett-Packard, LG, Maytag, Simmons, Philips, RCA, JVC, Sharp and Magnavox. In 2014, the company acquired a 100% ownership interest in Progressive Finance Holdings, LLC (Progressive), a virtual lease-to-own company. As of December 31, 2014, the company had 2,108 stores, comprised of 1,326 Company-operated stores in 28 states and the District of Columbia and 782 independently-owned franchised stores in 47 states and Canada. Segments The company’s segments include Sales and Lease Ownership, Progressive, HomeSmart, Franchise, and Manufacturing. Sales and Lease Ownership This segment provides durable household goods to lower to middle income consumers. Its customer base is comprised primarily of consumers with limited access to traditional credit sources, such as bank financing, installment credit or credit cards. Its stores provide a selection of brand name electronics, computers, appliances and furniture, including furniture manufactured by Woodhaven Furniture Industries division. Progressive This segment partners with retailers, primarily in the furniture, mattress, mobile phone, consumer electronics, appliance and household accessory industries, to offer a lease-purchase option for customers to acquire goods they might not otherwise have been able to obtain. The company serves customers who are credit challenged and are therefore unlikely to have access to traditional credit-based financing options. The company offers a technology-based application and approval process that does not require Progressive employees to be staffed in a store. Once a customer is approved, this segment purchases the merchandise from the retailer and enters into a lease-to-own agreement with the customer. The contract provides early-buyout options or ownership after a contractual number of renewals. This segment has retail partners in 46 states and operates under state-specific regulations in those states. HomeSmart This segment serves customers who prefer the flexibility of weekly payments and renewals. This segment provides consumer goods that are similar to those available in its Aaron's Sales & Lease Ownership stores. As of December 31, 2014, it had 83 company-operated HomeSmart stores in 11 states. Franchise This segment franchises the company’s Aaron's Sales & Lease Ownership and HomeSmart stores in markets. Manufacturing Woodhaven Furniture Industries, the company’s manufacturing segment, operates as a furniture lease company in the United States that manufactures its own furniture. Substantially all produced items are leased or sold through company-operated or franchised stores. The Woodhaven Furniture Industries segment produces upholstered living-room furniture (including contemporary sofas, chairs and modular sofa and ottoman collections in natural and synthetic fabrics) and bedding (including standard sizes of mattresses and box springs). This segment also provides replacement covers for all styles and fabrics of its upholstered furniture, as well as other parts, for use in reconditioning leased furniture that has been returned. This segment consists of five furniture manufacturing plants and nine bedding manufacturing facilities aggregating approximately 818,000 square feet of manufacturing capacity. Strategy The company has implemented a strategic plan focused on its core business as follows: emphasizing same store revenue growth for its core portfolio through improved execution, optimization of merchandising and pricing and an enhanced go-to-market strategy; enhancing and growing online platform, as well as extending assortment with online-only offerings; driving cost efficiency to recapture margin, including through selling, general and administrative cost savings and rationalizing underperforming stores; moderating new company-operated store growth to result in no net store growth after store closings; and strengthening and growing the franchise store base. Seasonality The company’s revenue mix is moderately seasonal for both its store-based operations and Progressive business. The first quarter of each year generally has higher revenues than any other quarter. This is primarily due to realizing the full benefit of business that historically gradually increases in the fourth quarter as a result of the holiday season, as well as the receipt by customers in the first quarter of federal and state income tax refunds. The company tends to experience slower growth in the number of agreements on lease in the third quarter for store-based operations and in the second quarter for Progressive business when compared to the other quarters of the year. Government Regulation The company’s sales and lease ownership franchise program is subject to the Federal Trade Commission regulation and various state laws regulating the offer and sale of franchises. Competition The company’s major competitor includes Rent-A-Center, Inc. History Aaron’s, Inc. was founded in 1955. The company was incorporated in 1962 as a Georgia corporation.
aaron's inc (AAN:New York)
309 East Paces Ferry Road, NE
Atlanta, GA 30305
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