Robbins Arroyo LLP: Rent-A-Center, Inc. (RCII) Misled Shareholders According to a Recently Filed Lawsuit
Robbins Arroyo LLP announces that a lawsuit was filed against Rent-A-Center, Inc. (NASDAQGS: RCII) in the U.S. District Court for the Eastern District of Texas. The complaint is brought on behalf of all purchasers of Rent-A-Center securities between July 27, 2015 and October 10, 2016, for alleged violations of the Securities Exchange Act of 1934 by Rent-A-Center’s officers and directors. Rent-A-Center, together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates through four segments: Core U.S., Acceptance Now, Mexico, and Franchising.
Rent-A-Center Accused of Implementing Inadequate Point of Sale System
According to the complaint, in the summer of 2015, Rent-A-Center began implementing a point of sale system (“POS”) and customer credit program to control inventories and increase revenues and profitability. On July 28, 2015, during a conference call with investors, Rent-A-Center reaffirmed the company’s commitment to the POS and touted the benefits of the system, stating that it would “provide us the tools to better serve our customers.” On July 27, 2016, the company issued a press release reporting its financial results, stating that although the POS implementation negatively impacted the company’s Core U.S. revenue and caused the company to revise its outlook for the year, the benefits of the POS “will play an important role in helping reinvigorate Core revenue in the future by enabling eCommerce and unlocking new pricing capabilities.”
The complaint alleges that Rent-A-Center officials failed to disclose that: (1) Rent-A-Center could not properly implement its new POS; (2) the POS was performing extremely poorly; (3) as a result, the company’s Acceptance Now credit system could not be implemented properly; (4) the company could not meet revenue and profitability guidance provided to investors; and (5) as such, the company would need to revise its prior guidance. On October 11, 2016, Rent-A-Center issued a press release which disclosed that the company experienced POS performance issues and outages that resulted in a larger than expected negative impact on Core U.S. sales. Rent-A-Center further stated that it expected to take several quarters to fully recover from the impact to the Core U.S. portfolio. On this news, Rent-A-Center stock fell $3.70 per share, or nearly 30%, to close at $9.18 per share on October 11, 2016.
Rent-A-Center Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.