Aarons 2015 Annual Report Download - page 6

• Champion compliance – Aaron’s, Inc. is a large and diverse company with thousands of daily transactions that are extensively regulated and subject
to the requirements of various federal, state, and local laws and regulations. We continue to believe and set expectations that long-term success
requires all associates to comply with all laws and regulations governing our company’s behavior.
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As of December 31, 2015, the Company had six operating and reportable segments: Sales and Lease Ownership, Progressive, HomeSmart, DAMI, Franchise
and Manufacturing. The results of DAMI and Progressive have been included in the Company’s consolidated results and presented as reportable segments
from their October 15, 2015 and April 14, 2014 acquisition dates, respectively.
Our Company-operated stores and franchise operations are located in the United States and Canada. Additional information on our six reportable segments
may be found in (i) Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (ii) Item 8. Financial Statements
and Supplementary Data.
Sales & Lease Ownership
Our Aaron's Sales & Lease Ownership operation was established in 1987 and employs a monthly and semi-monthly payment model to provide durable
household goods to lower to middle income consumers. Its customer base is comprised primarily of customers with limited access to traditional credit sources
such as bank financing, installment credit or credit cards. Customers of our Aaron’s Sales & Lease Ownership division take advantage of our services to
acquire consumer goods they might not otherwise be able to without incurring additional debt or long-term obligations.
We have developed a distinctive concept for our sales and lease ownership stores including specific merchandising, store layout, pricing and agreement terms
all designed to appeal to our target consumer market. We believe these features create a store and a sales and lease ownership concept that is distinct from the
operations of the lease-to-own industry generally and from consumer electronics and home furnishings retailers who finance merchandise.
The typical Aaron’s Sales & Lease Ownership store layout is a combination showroom and warehouse comprising 6,000 to 8,000 square feet, with an average
of approximately 7,200 square feet. We select locations for new Aaron’s Sales & Lease Ownership stores by focusing on neighborhood shopping centers with
good access that are located in established working class communities. In addition to inline space, we also lease and own several free standing buildings in
certain markets. We typically locate the stores in centers with retailers who have similar customer demographics.
Each Aaron’s Sales & Lease Ownership store usually maintains at least two trucks for delivery, service and return of product. We generally offer same or next
day delivery for addresses located within approximately ten miles of the store. Our stores provide a broad selection of brand name electronics, computers,
appliances and furniture, including furniture manufactured by our Woodhaven Furniture Industries division.
We believe that our Aaron’s Sales & Lease Ownership stores offer prices that are lower than the prices for similar items offered by traditional lease-to-own
operators, and substantially equivalent to the "all-in" contract price of similar items offered by retailers who finance merchandise. Approximately 97% of our
Aaron's Sales & Lease Ownership agreements have monthly terms and the remaining 3% are semi-monthly. By comparison, weekly agreements are the
industry standard.
We may re-lease or sell merchandise that customers return to us prior to the expiration of their agreements. We may also offer up-front purchase options at
prices we believe are competitive. At December 31, 2015, we had 1,223 Company-operated Aaron’s Sales & Lease Ownership stores in 28 states, the District
of Columbia and Canada.
Progressive
Established in 1999, Progressive is a leader in the expanding virtual lease-to-own market. Progressive partners with retailers, primarily in the furniture and
bedding, mobile phones, consumer electronics, appliances and jewelry industries, to offer a lease-purchase option for customers to acquire goods they might
not otherwise have been able to obtain. We serve customers who are credit challenged and are therefore unlikely to have access to traditional credit-based
financing options. We offer a technology-based application and approval process that does not require Progressive employees to be staffed in a store. Once a
customer is approved, Progressive purchases the merchandise from the retailer and enters into a lease-to-own agreement with the customer. The contract
provides early-buyout options or ownership after a contractual number of renewals. Progressive has retail partners in 46 states and operates under state-
specific regulations in those states.
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