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Aaron’s Progressive Leasing Idea Proposal (AAN)

Aaron’s Progressive Leasing Idea Proposal (AAN)

Will Aaron’s Progressive Leasing unit continue to grow at its current pace?

Report Available: February 8, 2018


Blueshift’s initial research found that Progressive Leasing, AAN’s lease-to-own option for retailers, is growing significantly, outperforming AAN’s store business. Progressive is adding new accounts from national retailers like SIG and seeing retailers like CONN switch to Progressive from competitors. RCII’s Acceptance Now is a main competitor to Progressive, though it struggled through a more challenging third quarter than its rival.



  1. AAN missed Q3 earnings expectations but beat on revenue, which was up 9% year to year. Same-store sales declined 5.6% in the quarter, but AAN’s Progressive Leasing unit grew revenue 29% and is now nearly as big as its store segment. Progressive achieved a 36% gain in invoice volume with growth in both new accounts and sales per existing account. Progressive said about 20,000 total stores completed a lease during Q3, up 26% from a year ago. Invoice volume per active door increased 8% in the quarter. Write-offs for Progressive were 6.2% of revenue (expectations are to be within 5% and 7%) and bad debt expense was 12.7% (expectations are to be within 10% to 12%). The higher bad debt expense is being driven in part by the high rate of invoice growth.
  2. Progressive is attractive to retailers who do not want take on the burden of providing financing to higher-risk customers. Progressive does not run credit checks, allowing retailers to serve customers who are rejected for traditional loans because of poor credit. Progressive considers employment history, income, and banking history, and not all applicants are approved. The plans feature early buy-outs and do not have as many fees as more traditional plans. Initial payment is as low as $49 and allows customers to leave the store with their item, which Progressive technically owns until the lease is paid off. There is a buyout option up to 12 months if full payment is not rendered within 90 days. BIG, CONN, Cricket Wireless, Mattress Firm, SIG, and OSTK are among national retailers using Progressive.
  3. Art Van Furniture is another Progressive user, offering it among four options for customers to finance their purchases. Progressive has a 12-month program with a 90-day repayment option, flexible payment plans, and $49 application fee, the same as with most of its retail partners. The other options include a SYF card with credit approval, Tidewater Finance with 12 months same as cash and closed end contracts, and free layaway with a 25% deposit and 60 days to pay it off.
  4. RCII has Acceptance Now, its version of Progressive. The company missed expectations for Q3 earnings and revenue, which declined 7% year to year. Total revenue for Acceptance Now declined 5% in the quarter, primarily because of the closure of hhgregg stores and CONN switching to Progressive earlier in 2017. Acceptance Now’s same-store sales increased 120 basis points sequentially and 820 basis points year to year. Skip/stolen losses were 10.8% and expected to climb in the coming quarter. Acceptance Now is looking to drive higher ownership and less returned product, testing shorter terms, lower total costs, and more affordable purchase options with a higher average monthly price. Acceptance Now offers similar financing and terms as Progressive, with no credit approval necessary and an early purchase option.


How big can Progressive become? Will Progressive plateau or can it keep growing 30% annually? When retailers add Progressive, what is the effect on their business? Why are retailers choosing it over competitors? How big of a threat is Acceptance Now? How does layaway affect Progressive? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Progressive retailers, Retailers choosing competitors over Progressive, Store personnel at Progressive retailers, Competitors, and Industry specialists.


Companies: Aaron’s Inc. (AAN), Rent-A-Center Inc. (RCII), Synchrony Financial (SYF)


Research Begins: January 22, 2018


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