FORT WORTH, Texas (Sept. 4, 2001)—Cash America International Inc., a financial services company that owns Rent-A-Tire Inc., is considering leaving the tire business.
Rent-A-Tire is a rent-to-own tire chain that serves customers with poor credit histories, who can rent stylish tires and wheels without a deposit or credit check. The subsidiary of Fort Worth-based Cash America operates 43 stores throughout Texas, Oklahoma, Louisiana and Arizona.
In a recent letter to shareholders regarding the company's financial performance, Cash America CEO Daniel Feehan noted that Rent-A-Tire has generated losses since its inception in 1998, and the company expects “to incur more losses in 2001 as the units continue maturing.” He said Cash America is not expanding its store base at this time and remains “committed to finding a reasonable exit at the earliest possible date.”
Rent-A-Tire experienced a $1.9 million loss during the first half of 2001, and an $1.6 million loss during the same period in 2000, according to filings with the Securities and Exchange Commission.
Cash America declined to elaborate if it would divest its rental tire stores or close them, stating that the company is still in discussions over the future of Rent-A-Tire.
“We're in the process of reviewing what our options are right now,” Jim Kauffman, executive vice president of Cash America, told Tire Business. “It's really premature to talk about what the plans might be because they're not finalized and we're not quite sure what they're going to be.”
Mr. Kauffman also declined to elaborate on the reasons for Rent-A-Tire's failure to turn a profit in the past few years.
“It's a whole host of reasons,” he said. “It's one of the things we're looking at to see what we need to be doing about that.”
Besides Rent-A-Tire, Cash America acquires and operates pawnshops and provides check-cashing services.