The Upcoming Aaron’s Spinoff: What to Expect

Aaron’s Inc., an omnichannel provider of lease-purchase solutions announced on July 29 that it had ongoing plans to separate into two independent, publicly-traded companies. The separation will include the Aaron’s Business, “Aaron’s” and Progressive Leasing, “Progressive”.

Part of Aaron’s plans for the separation is to make it a tax-free spinoff and is expected to be completed by the end of this year. Both companies stand to greatly benefit from the improved strategic focus as well as, market-leading positions and strong free cash flow to enable both companies to unlock better value creation opportunities.

“I’m proud that we have built two strong businesses, both of which are well-positioned for long-term success as independent companies,” said Aaron’s President and Chief Executive Officer John Robinson. “The Board and management team believe that separating Progressive and Aaron’s will enhance long-term shareholder value and is the next logical step in the evolution of our organization.”

Both Aaron’s and Progressive’s growth result over the years have greatly differed, and it hasn’t changed despite COVID-19. In 2019, Progressive reported revenue of approximately $2.2 billion, while Aaron’s saw approximately $1.8 billion in revenue in the same year. Investors in Aaron’s, especially long-term ones have known for a while that Aaron isn’t living up to expectations. Thankfully, the Progressive business unit has helped to sustain the company.

“Aaron’s Progressive Leasing unit continues to post spectacular growth and based on guidance, almost two-thirds of this year’s profits. But the legacy Aaron’s business continues to struggle, and there are real questions about the viability of its business,” said Vince Martin, an investor in Aaron’s.

Michael Boyd of Energy Income Authority said concerning Aaron’s that the company has “created a juggernaut in the virtual lease to own market” since its purchase of Progressive Leasing in 2014. He added that “unfortunately, at the same time the legacy Aaron’s business has cratered,” accusing management of “throwing good money after bad buying out franchises.”

Progressive will include the company’s current Progressive business division and Vive Financial. As an independent company, Progressive will be able to:

• Invest more in innovative technologies

• Grow existing retail partnerships and attract new retail partnerships

• Improve its financial profile through its capital-efficient business strategy and model

Aaron’s will consist of the 1,400 company-operated and franchised stores in the 47 U.S. states, including Canada. The company will also include the e-commerce platform Aarons.com and Woodhaven Furniture Industries.  

Steve Michaels, Aaron’s chief financial officer and president of strategic operations has been appointed as Progressive’s CEO which took effect on July 31, 2020. He succeeded Ryan Woodley. While Douglas Lindsay, president of the company’s Aaron’s business segment has been appointed as the chief executive of Aaron’s Business.