S&P: Rent-A-Center on watch

S&P said it placed the BB- corporate credit rating on Rent-A-Center Inc. on CreditWatch with negative implications.

The CreditWatch placement follows news that the company’s same-store sales in its core business, which represents about 70% of overall revenues, declined 14% in the fourth quarter of 2016, the agency said.

Rent-A-Center also reported higher promotions, elevated payment delinquencies in its rental portfolio and an overall 10% reduction in revenue stream per store, S&P said.

The negative watch indicates at least a 50% chance that the agency could lower the ratings at least one notch in the next three months, S&P said.

The extent of any downgrade will consider Rent-A-Center's ability to cope with the cyclical decline of the overall rent-to-own industry, effectively compete with its main competitor Aaron's, the agency said, and move past the internal systems outages and staffing issues it has faced recently.

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