Rent-A-Center Inc. (RCII) shares surged 11 percent in pre-market trade Thursday after the company reported cost-cutting measures and said it was exploring “strategic and financial alternatives” to boost shareholder value.
The rent-to-own company said it plans to cut its workforce by 25 percent or 250 positions in Plano, Texas as part of its long term plan to save $65 million-$85 million annually in operational costs. This round of job cuts is estimated to save the company about $20 million in 2018, including related administrative expenses of about $3 million.
In other strategic moves, Rent-A-Center’s board said its reviewing all its options to boost its value for shareholders, including a sale of the company. It said it will make a decision on that matter in the second quarter.
"The company has received proposals from bidders interested in acquiring the company and the board and its advisors remain actively engaged with these parties," Rent-A-Center said in a statement.
These announcements come just after the company said it would eliminate its Chief Operating Officer position to bring it under the direct control of new CEO Mitch Fadel. (See also: Rent-A-Center CEO Robert Davis Resigns.)
Rent-A-Center shares are down more than 31 percent so far this year as it faces numerous challenges. The company, which has been closing stores, recently reported a 6 percent decline in fourth-quarter core revenue to $444.7 million. Excluding a gain from federal tax changes, the company reported a loss of $8.5 million during the quarter.