AAN
#Yes, this is Douglas.
I was just commenting on that.
I'll refer to your second question first.
Yes, I think what we've seen is an improvement in our rate of decline.
So we are still low-single-digits negative, but we are seeing stabilizing in that number, which is good.
In terms of the deleverage on the expense structure, we're continuing to look at that, but we're looking at it across the organization.
So it's not just store costs that we're looking to get more efficient in, it's also our regional structure and through other store support centers.
So we'll continue to look at that and its asset, as well as our footprint in each of the markets we are in.
Thanks, <UNK>.
Good question, J.
R.
We will just limit it to saying that we are really happy with where the pipeline sits today.
We've definitely seen an uptick in conversations across the board over the last 6 to 12 months as more national retailers become aware of the offering, the value proposition for their customers.
And that's in step with ongoing positive dialogue with regional retailers.
The door growth that you saw in Q4, Q1 and Q2, is really representative of a pretty broad base of growth across both those buckets, regional and national retailers.
Yes, great point.
When I referenced earlier the excellent performance from our operations and collections team, certainly included in that would be the performance of the customer service hubs which we have across the country.
We are now at 22 hubs, and those teams are performing well, and that's providing a nice lift in our write-off performance that we're benefiting from year over year.
So the teams are doing a great job.
And as you know, that has to start with underwriting.
So our decisioning teams are doing a great job getting us started on the right track with good decisioning up front, good decisions up front on the applications that we're collecting.
And that flows through to execution for the tail-end, with the operations team.
They're all doing a phenomenal job.
Yes, so as you know, we launched our national partnership with Cricket in June.
The launch was a success.
We continue to see penetration into our store base, and deliveries increasing in that category.
We're continuing to monitor it.
I think the most important thing is, we are being tight with our inventories and not trying to over-buy in the category, and make sure that we are selling through what we have, and understanding the real profit margins in the category.
So it's early in the Cricket relationship, but we've had good adoption, and we will continue to monitor the category.
I think in terms of the rest of the year, it should be accretive to our same-store sales.
But it's too early to say, really, how big that number might be.
Yes, J.
R.
, it was between 50 and 80 basis points in Q2.
It's pretty small.
Good question.
Ryan here.
So you would see in the pipeline examples of retailers that currently exist within our base, of approximately 14,000 active doors.
And as you know, across that, while we have historical strength in our core furniture and bedding, within the last couple of years have expanded outside of that to include verticals like mobile phones, electronics, jewelry, appliances.
And you would see all of that if you looked in our pipeline today.
Yes, sure thing.
First, on the decisioning.
So we invest a lot in folks to run our decisioning systems.
We have teams of data scientists and statisticians who are doing a phenomenal job in that area of the business.
Their mandate really is to generate consistent enhancements to that system.
So there's not really a step function, so much as it is continual improvement in that area, which we saw again in Q2.
And like I say, their team is doing a great job there.
The confidence that we get in those results is that they are supported by consistently positive metrics across the business.
If you look at those origination statistics, but flow that through the rest of the business to look at early indicators of lease poor performance, delinquencies on down the line, operations on our customer service centers, which we referenced earlier.
Our estimates of mature poor performance, they all support the same positive message about the quality of the lease pool that we are currently managing.
So the team is doing a great job there.
Very confident in their execution.
On competition, I think I'd say it remains pretty consistent with what we've seen in recent quarters.
For some time now, there have been several folks following on the lead of Progressive in the virtual market, and coming to market with similar business models.
And that really hasn't changed in recent quarters.
Our job, and what I feel the team has executed well on, is to remain very price-disciplined.
And if you saw our average pricing over time, it would reflect that.
As you know, the 90-day buyout option and the low customer pricing has been differentiating features of our offering since inception.
So we haven't really had to change that in response to competitive dynamics.
They decided to discontinue the pilot.
This is <UNK>, I'll give it a shot.
And Douglas, feel free to add.
We get asked this question a lot.
We've been asked it for the last couple of years these macro changes have happened.
But really, the one thing we've seen from a macro perspective in our numbers, has been the impact of the oil price decline in Texas that happened really this quarter, starting in last year.
And other than that, we really haven't seen a big change in our customer base.
That certainly hurt us last year, and we think that's improving from a number of perspectives now.
But really that would be kind of view on employment.
So employment in those areas obviously declined, and that hurt us.
But generally, we haven't seen other macro factors like lower fuel prices necessarily helping our customer, or other macro factors hurting our customers.
Well, and I'll take that.
We're working on a thorough review of our entire spend structure, Douglas mentioned earlier.
So that process is underway, and we aren't prepared yet to give kind of the numbers on that in any regard.
But we are certainly taking a hard look across the organization to make sure that we have the right cost structure, given the demand environment that we've been facing.
And in terms of variability in performance, that's something we are working on every day.
We are really trying to focus our operations organization and tightening our variability and lessening the distribution of performance variants within the organization.
We are also narrowing our focus on the goals that we're trying to achieve.
There's lots of levers we can pull in the business, and we are just trying to narrow the focus on those levers and drive lesser variability across our units.
Yes, and if there is any positive in the fact that our performance ---+ what Douglas just said is that there is variability.
So with better execution, we should see improvement.
And that's something that ---+ that's the reason we brought Douglas in.
And we think we can move the needle there, and as Douglas said, pull that lever, plus other ones.
So we are optimistic about it, but we're ---+ it's a difficult environment, so it takes some time.
Sure.
So I'll go first on Progressive.
In the second quarter, bad debt expense was 9.5% of revenue versus 9.8% the year prior.
And write-offs were 4.5% of revenue versus 6.1% in the year prior.
And on the core of the write-offs, we're 3.7% versus 3.6% in the year prior.
And there's not a bad debt metric in the core.
Good morning.
Obviously you're getting my interpretation of the success of the pilot.
But I think execution in the store was a bright spot.
I think it was tremendously successful, and we evolved the product a bit to excel in that environment.
And I think the team did a phenomenal job on execution there ---+ both teams.
We enjoyed a great working relationship with our counterparts at Walmart, and our team certainly did a phenomenal job, both in Salt Lake and in the field there, in the pilot.
Certainly not a factor, as far as we're concerned.
Yes, the one thing I would add to that, that Ryan mentioned.
We really did innovate our product because of the pilot.
And I think it will serve us well with other retailers going forward, and it probably already has.
And Walmart is a process-driven organization, and that helped us improve.
And those are dividends we will be able to reap over the next few years, I believe.
We don't have a view on that.
I think Walmart can ---+ they are a big company, they can do a lot of things.
I don't know if this will be an area of focus for them or not.
I don't think that factored into it, but we don't have a lot of visibility into their full decision-making process.
So your guess is as good as ours on that.
Yes, I mean we expect we're going to have to continue to innovate and evolve, just like the retail landscape is doing across all offerings.
So we expect it will grow.
We want it to grow.
We do truly look at it as an omni-channel approach, in that we're partnering with the stores.
And so it's just another avenue for our customers to get the product and then be serviced by our stores and our service network out there across the country.
So yes, we've talked about a mid-single-digit contributor in 2016.
But we expect it to continue to grow in future years.
And <UNK>, that depends to some extent on what our store footprint ends up looking like.
So over time, that's going to evolve, as it has in another retailers.
And I don't think we know enough about what that footprint is going to look like in conjunction with e-com yet.
So it really is an evolution that we're trying to make, and also do it profitably and smartly.
So I mean, we certainly tag our capabilities on e-com via Aarons.com in all of our advertising.
We're doing a decent amount and an increased amount versus last year on digital spend, as it relates to paid search and display and social.
But we don't have like a ramped-up campaign right now on e-com.
We see every time we advertise, and generally, whether it be television or campaigns, or even Addo, we can see the spikes on Aarons.com traffic.
And we are working really hard to optimize conversion of those visits to Aarons.com.
And so that's a lever and a dial that we can test and learn, and continue to get better at.
Nothing material that we've seen.
We're constantly looking at that assessing our wage versus the market, and what's going on out there.
But nothing material to speak of.
Thank you.
Thank you.
And thank you for your participation on our earnings call today.
We look forward to updating you on our next quarterly call.
Thank you very much.
