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Rent-A-Center To Layoff 250 Employees, Reviewing Alternatives

Rent-A-Center, Inc. (RCII) Wednesday said it will cut 25% of its corporate office workforce in Plano, Texas, as the household goods leasing company implements costs cutting initiatives to improve growth and profitability.

Rent-A-Center is reducing its headcount by about 250 positions, effective today. Rent-A-Center expects this decision to "better align the company's organizational structure with its operations under its strategic plan to drive $65 million to $85 million of annualized cost savings opportunities."

The headcount reduction, along with related G&A, is expected to generate about $28 million in annual run-rate cost savings with about $20 million realized in 2018. The company expects to incur employee severance charges and other one-time costs relating to these workforce reductions of around $3 million in the first quarter.

The headcount reduction follows the recent elimination of Rent-A-Center's Chief Operating Officer Joel Mussat. The elimination of that position is intended to bring the overall operations of the company under the direct control of CEO Mitch Fadel.

"As we outlined just two weeks ago, Rent-A-Center is implementing initiatives to reduce costs and improve performance. While major reductions in work force are difficult, we are confident that Rent-A-Center will be better positioned for long-term growth and profitability," said Mitch Fadel, Chief Executive Officer of Rent-A-Center. "Additionally, we remain focused on delivering a more targeted value proposition and look forward to building on our momentum from our January and February performance."

The company also reconfirmed that its Board is continuing its review of strategic and financial alternatives to maximize stockholder value, including evaluating a sale. Rent-A-Center has received proposals from bidders interested in acquiring and the Board and its advisors remain actively engaged with these parties.

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