LOS ANGELESRent-to-own tire/-wheel chain Rent-A-Wheel/Rent-A-Tire expanded its network by nearly a third earlier this year buying the assets of the Rimco tire-and-wheel leasing businesscomprising 32 company-operated and franchised stores in 11 statesfrom rent-to-own specialist Aaron's Inc.
The Rimco business generated $20.6 million in revenue in 2013, Aaron's said, or about $625,000 per outlet. Rent-A-Wheel/Rent-A-Tire paid $10 million for the business, according to 2013 financial statements of Aaron's, which said it had determined the business no longer fit its model.
We are happy for the physical expansion but even more excited to add the Rimco employees to our team, said Matt Seaburn, president and partner of Rent-A-Wheel/Rent-A-Tire. Our constraint to growth has been finding key talent. This acquisition adds strength to our ranks that will help the company to accelerate growth.
With the acquisition, Los Angeles-based Rent-A-Wheel/Rent-A-Tire now operates 120 stores in 15 states, including five that are franchised. Rent-A-Wheel/Rent-A-Tire converted the Rimco stores to its look with exterior signage and interior point-of-purchase décor and retained a majority of the Rimco employees.
The company expects annual sales to jump to about $122 million in 2014 from $103 million in 2013.
The acquisition puts Rent-A-Wheel into five new states plus a district in Los Angeles where it's not been before, the company said. In addition, it makes Rent-A-Wheel a franchisor for the first time.
Rent-A-Wheel said the Rimco stores are similar in size and staffing with its own stores, but they've performed below our standards.
The locations are all leased properties, Rent-A-Wheel said.
Rent-A-Wheel last year outlined plans to expand its network beyond the 100-outlet mark, building on the popularity of renting and/or delaying payments for tires and wheels.
Ronald Allen, Aaron's chairman, president and CEO, said: We feel that the sale of Rimco will be positive for both Aaron's and Rent-A-Wheel/Rent-A-Tire. Rimco was a small part of Aaron's business,...and this divesture will enable us to further focus efforts on improving the financial performance of our Aaron's and HomeSmart stores.
The Rimco business was slightly in the red on an operating basis in fiscal 2013, according to Aaron's 2013 annual report.