Aarons 2008 Annual Report Download - page 12

Annuity nature of
the business
This spreading of revenues over time and over
a broad customer base mitigates business and
financial risk. It should be noted, however, that
the annuity nature of the business also means that
our revenues do not spike when the economy picks
up, rather our revenues trend up. Similarly, when
the economy enters a downturn or recession, our
business does not drop sharply as happens at many
retailers. In fact, Aaron’s tends to pick up custom-
ers during periods of economic weakness. Our risk
is also mitigated by our business model. Unlike a
typical credit sale where the customer enters into
a legal commitment for the purchase price of a
product, the Aaron’s customer leases the product
generally on a month to month basis. If a customer
can no longer pay or no longer wishes to pay, the
product is returned and the financial obligation
is terminated. Consistently, in times of economic
expansion and contraction, our write-offs have
averaged less than 3% of revenues.
National purchasing power
A critical factor in today’s economic climate is
the Company’s sizable purchasing power that
enables stores to offer a broad assortment of top
quality goods at exceptionally competitive pricing.
Electronics continue to be a growth category and
the phase-out of analog television signals should
continue to boost demand for large-screen digital
televisions over the coming year. Our computer
leasing business is thriving and laptops are now
a larger product category than desktop models.
In recent years, we have developed a standard
freestanding store, approximately 9,000 square feet
with an attractively merchandised sales floor and
uniform color palette and signage. This standard
store format is significantly larger than a typical
$
average monthly
customer payment
% of
revenues
Write-offs
have averaged
less than
10