FORT LAUDERDALE, Fla. - Nations-Rent and Lowe's announced an exclusive multiyear strategic alliance to operate NationsRent rental centers within selected Lowe's home-improvement stores. Under the agreement, which follows a six-month, six-store pilot program, NationsRent's full line of construction tools and equipment will be offered to Lowe's professional contractor and do-it-yourself customers.
The companies plan to open 60 NationsRent rental departments adjacent to the entrances of Lowe's stores in 22 major markets by the end of 2001. The rental departments will be leased by NationsRent from Lowe's for a term expiring in 2008, with two five-year renewal options.
The alliance is expected to enhance NationsRent's penetration in existing markets by increasing the speed and lowering the cost and risk of entering new markets.
"We view the ability to locate NationsRent rental centers in the high-traffic, high-profile operations of ... Lowe's as a significant event in the development of the NationsRent brand," NationsRent chairman and CEO James Kirk said. "These rental operations, which can be opened quickly and with relatively low capital, are expected to ramp to profitability within three to six months of opening and provide significantly higher returns on invested capital to our shareholders."
Fort Lauderdale-based NationsRent is No. 4 on the RER 100. Wilkesboro, N.C.-based Lowe's is the No. 2 home-improvement retailer in the United States.
With lower-than-expected revenue growth this year, NationsRent also said it has initiated aggressive cost-cutting measures to achieve $30 million in annual savings. The company had expected 2000 pro forma revenue to increase 20-plus percent but said it now is targeting "very healthy" 15 percent growth.
"We believe this [15 percent] growth rate confirms the continuing strength of the rental industry and underscores the fundamental shift from ownership to rental," NationsRent CEO/chairman James Kirk said.
NationsRent also named former Blockbuster senior vice president of operations Gerald Weber as executive vice president of operations. "Gerry's multiunit experience is particularly appropriate for us at this point in our company's development as we focus on high-return internal growth opportunities, including our strategic alliance with Lowe's," Kirk said.
In related news, BlueStone Capital lowered its rating on NationsRent to "market perform-outperform" from "outperform-outperform," adding that the planned savings from reduced operating costs would not come soon enough to offset the slower growth.
