Aarons 2013 Annual Report Download - page 15

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PART I.
ITEM 1. BUSINESS
Unless otherwise indicated or unless the context otherwise requires, all references in this Annual Report on Form 10-K to the
“Company,” “we,” “us,” “our” and similar expressions are references to Aaron’s, Inc. and its consolidated subsidiaries.
General Development of Business
Established in 1955 and incorporated in 1962 as a Georgia corporation, Aaron’s, Inc., is a leading specialty retailer of consumer
electronics, computers, residential furniture, household appliances and accessories. We engage in the lease ownership, lease and
retail sale of a wide variety of products such as widescreen and LCD televisions, computers, tablets, living room, dining room
and bedroom furniture, washers, dryers and refrigerators. Our stores carry well-known brands such as Samsung®, Frigidaire®,
Hewlett-Packard®, LG®, Maytag®, Simmons®, JVC®, Sharp® and Magnavox®.
As of December 31, 2013, we had 2,151 stores, comprised of 1,370 Company-operated stores in 29 states and 781
independently-owned franchised stores in 47 states and Canada. Included in the Company store counts above are 1,262 Aaron’s
Sales & Lease Ownership stores, 81 Company-operated HomeSmart stores, our weekly pay sales and lease ownership concept,
and 27 Company-operated RIMCO stores, our automobile tires, wheels and rims sales and lease ownership concept. In January
of 2014, we sold our 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores.
Total revenues increased to $2.2 billion in 2013 from $1.7 billion in 2009, representing a 6.5% compound annual growth rate.
Our total net earnings from continuing operations increased to $120.7 million in 2013 from $112.9 million in 2009,
representing a 1.7% compound annual growth rate.
We own or have rights to various trademarks and trade names used in our business including Aaron’s, Aaron’s Sales & Lease
Ownership, RIMCO and Woodhaven Furniture Industries. We intend to file for trade name and trademark protection when
appropriate.
Over the past several years, our long-term strategies have included:
• Opening additional Company-operated sales and lease ownership stores - We open sales and lease ownership stores
in existing and select new geographic markets. Additional stores help us to realize economies of scale in purchasing,
marketing and distribution. We have added a net of 333 Company-operated sales and lease ownership stores since the
beginning of 2009.
• Increasing our sales and lease ownership franchises - We believe that our franchise program allows for strategic
growth and increased brand exposure in new markets. In addition, the combination of Company-operated and
franchised stores creates a larger store base that generally enhances the economies of scale in purchasing, distribution,
manufacturing and advertising. Franchise fees and royalties represent a growing source of revenues for us. We have
added a net of 277 franchised stores since the beginning of 2009.
• Increasing revenues and net earnings from existing sales and lease ownership stores - We experienced same store
revenue growth (revenues earned in stores open for the entirety of the measured periods) from our Company-operated
sales and lease ownership stores of .9% in 2013, 5.1% in 2012 and 4.4% in 2011. We calculate same store revenue
growth by comparing revenues from comparable periods for all stores open during the entirety of those periods,
excluding stores that received lease agreements from other acquired, closed or merged stores.
• Pursuing selective acquisitions in both new and existing sales and lease ownership markets - When opportune, we
explore acquisitions of other rent-to-own operations and select franchised stores. Since the beginning of 2009, we have
acquired the lease agreements, merchandise and assets of 220 sales and lease ownership stores. We merged 87 of these
stores with existing locations and six stores were sold to franchisees, resulting in 127 net new stores from acquisitions.
When attractive, we also seek to convert the stores of existing independent operators to Aaron's Sales & Lease
Ownership franchised stores. Since the beginning of 2009, we purchased 69 and sold 61 of our sales and lease
ownership stores to franchisees.