The rent-to-own company Aaron's is making a foray into Europe, its first investment outside North America.
Atlanta-based Aaron's has invested $15.4 million in Perfect Home Holdings, a 5-year-old English company with 45 weekly rent-to-own stores. Aaron's has the option to buy the company outright after three or four years if it is performing as anticipated, President and CEO Robin Loudermilk said.
The 11.5 percent stake, Loudermilk said, is akin to Aaron's investing in a management team as it learns the business in the United Kingdom.
"We're not doing it just to invest 10 percent," Loudermilk said. "Our intent is to buy it."
Aaron's, which has more than 1,900 stores in the U.S. and Canada, has long had a goal of operating 3,000 monthly rent-to-own stores on this continent. As it has come closer to that number, the company has looked at other avenues for growth, including a weekly rent-to-own store called HomeSmart.
The Perfect Home investment is a good one, SunTrust Robinson Humphrey managing director David Magee said, because it gives Aaron's the opportunity to learn the business in another country without falling victim to the errors of other retailers who tried to expand internationally.
"The history of U.S. retailers going overseas, their success has been mixed," he said. "I'm happy to see a toe-in-water approach here."
If Perfect Home does not go as planned for Aaron's, Loudermilk said, the company has the ability to exit the investment.
Aaron's had previously expanded in Puerto Rico but sold off those stores, Loudermilk said. He expects this expansion to be different because Aaron's will use local management in England.
"We're very excited about it," he said. "We think it will work."
The U.K. has one large competitor, Loudermilk said, and several smaller ones. He said if the Perfect Home investment is successful, it could lead to expansion throughout the U.K. and the rest of Europe.
"We were founded as a growth company," he said. "We don't want to become a rental company with no growth and high profits."
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