Rent-A-Center said Wednesday it had laid off about 25% of its corporate workforce in Plano, Texas, and that it has received offers from bidders interested in acquiring the struggling furniture and equipment rental firm.
The layoffs, which were effective immediately, reduced Rent-A-Center’s headcount by about 250 positions and, according to the company, are “intended 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.”
Rent-A-Center expects the job cuts to generate approximately $28 million in annual run-rate cost savings with approximately $20 million realized in 2018.
“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,” CEO Mitch Fadel said in a news release.
On the “strategic alternatives” front, the company said it is continuing the review it began last October and “has received proposals from bidders interested in acquiring the company and the Board and its advisors remain actively engaged with these parties.”
“The board currently expects to reach a determination with respect to whether to pursue a sale of the company during the second quarter 2018,” it added.
As Reuters reports, Rent-A-Center has been under pressure from its largest shareholder Engaged Capital to sell itself but has previously rejected buyout offers. Another activist investor, Marcato Capital, has also pushed for a sale.
Rent-A-Center’s sales have declined for eight straight quarters. Its top management, including its chief executive, chairman, and chief operating officer have all stepped down since the strategic review began.
The company operates about 2,500 stores in the U.S., Mexico, Canada and Puerto Rico. In after-hours trading Wednesday, its shares, which used to trade near $40, rose nearly 8% to $8.26.
“We remain focused on delivering a more targeted value proposition and look forward to building on our momentum from our January and February performance,” Fadel said.