From Folding Chairs to Wide Screen Tv's

There’s gotta be a better way to make a living.

Tim Darnell

April 1, 2007

There likely comes a time during the course of building an empire when said empire builder stops, looks around, and says, "There’s gotta be a better way to make a living."

For Charlie Loudermilk, that moment – maybe the first of more to follow – came about 50 or so years ago, when he was laboring under a hot Georgia sun, loading and unloading the hundreds of U.S. Army surplus folding chairs that would become the basis for his billion-dollar business. Intrigued by a rental enterprise he saw as a newly minted college graduate, Loudermilk bought the chairs and began renting them for 10 cents per chair, per day. His first customer was an auction company that needed seats for an afternoon sale.

"There were a lot of times I said that I’d give the company a little more time," Loudermilk, now 79, says. "The financing was tough. I got into it without any money, and without any background of family money. To be honest, I really wouldn’t do it today. If I had known the price I was going to have to pay, I wouldn’t have done it. But now that I’ve paid the price, and the company has done well, I’m proud of it."

For Robert C. (Robin) Loudermilk, the moment of realization came around the time he was assistant manager of his father’s Decatur store, located along a tough stretch of Memorial Drive. " You have to realize, I grew up in this business. I’m 48, and the company has been around for 52 years. So I’d do summer work, putting up tables, driving the truck … Later, I was out on the street collecting money in the middle of the night. Once you get out of the day-to-day collections and weekend work, you realize you’ve gotten some 2007good experience, but you’re not too sure you want to do it again."

"We’ve both driven the truck," his father says. "I said just recently at our annual meeting, we appreciate the hard work our associates do every day, and we appreciate the wives and husbands who put up with those long hours as well."

There was probably plenty of celebration at that annual meeting of Aaron Rents, the company that Chairman and CEO Charlie Loudermilk began more than five decades ago and of which Robin Loudermilk now serves as COO. Aaron Rents, which began in 1955 with a $500 bank loan, is now a $1.3-billion business with almost 1,400 company-owned and franchised stores in 48 states, Puerto Rico and Canada. A private company that began renting chairs for parties has grown into a public behemoth that rents and sells residential and office furniture, consumer electronics and household appliances. From the first store on Peachtree, the business grew to three stores in 1964, then to 17 in six cities in 1972. In 1982 Aaron Rents went public with revenues of $49.2 million and 68 stores in 11 states.

Aaron Rents has been growing at a pretty good clip – 15 to 20 percent for some time now – and the company has a long-term goal of 3,000 stores across North America. But with predictions of oncoming high inflation rates, high interest rates and a summer of $4-gallon gasoline, what’s it going to take to get there?

"Our immediate goal is 2,000 stores in two years,"Robin Loudermilk says. "If we grow at the same rate we’re growing now, we’ll make it. This year, our goal is to add another 250 stores, and we think we’ll hit that by December 31. That’s about an 18 percent growth rate. Ultimately, our plan is to have a store next to every Wal-Mart, and there are 3,800 of those." Why Wal-Mart? Because many shoppers at those massive, blue-box supercenters can’t afford one-time price, big-ticket items, and that’s exactly the kind of items that Aaron Rents supplies.

Charlie Loudermilk says the company is shooting for $2 billion in sales by the end of 2008. Last year, Aaron Rents reported a 36 percent increase in net income, to $78.6 million, as revenues rose 18 percent, to $1.3 billion. Its stock price has surged 160 percent over the last five years, to $26 a share.

Aaron Rents recently joined Georgia’s elite list of companies with more than $1 billion in market value. It also now routinely makes the list of the state’s best-performing Georgia-based companies. Wall Street analysts who follow Aaron Rents regularly have “buy” ratings on the company’s stock. These kinds of facts give the distinct impression that Aaron Rents might be as close to recession proof as you can get in today’s American economy.

"We’d all be better off if interest rates were low and gas was a dollar a gallon," Robin Loudermilk says. “But the truth is, we’re a pretty good hedge against macro economic trends. What happens is that the customer cuts back on other things.


2007We’re a very transient business – we have been all along – but we’ve been here for 52 years and have weathered those trends in the past.

"The customer adapts and becomes very resourceful. We’re renting beds, refrigerators and the like, and you’re going to go without a lot of things but not your bed or your stove. These are basic necessities of American life, and that’s what keeps this business strong."

Aaron Rents has performed well even during the darkest recent periods of American economic performance. The only sign of slowing came right after 9/11 and the mild recession that followed."A lot of people don’t realize that we own a fair share of our own merchandise," Charlie Loudermilk says. "We guarantee we will match or beat a competitor’s price on the items we carry. We deal with a group of people who really need the product and want to pay for it. This is a credit-based transaction that’s been around for many years."

Aaron Rents’ primary customer is credit challenged; i.e., one who doesn’t have good enough credit to finance a sofa or refrigerator from a conventional retailer, but does have a job and enough income to make monthly payments. Wall Street analysts say the company doesn’t run credit checks, but does require proof of employment – such as a paycheck stub – and solid references. Aaron Rents aims at a customer base with a continually changing lifestyle, a constituency fraught with potential pitfalls but one in which the company strives to develop a business relationship.

"Our goal is to get you to own the product, and not put it back up on our shelves,"Robin Loudermilk says. "So we’re going to work with the customer to get them through the tough times and the ‘shock’ periods. If the customer hunkers down a week or two and really tries to make it work, they know we’re not going to come and pick up the item."

Aaron Rents’ reaction to Hurricane Katrina’s aftermath was widely noted by the media. "We told our displaced people to go the other stores in the area and they would have a job there,"Charlie Loudermilk says. "No one lost their job."And merchandise losses wasn’t reflected in any paychecks, either. "We owned those TVs or beds that went floating down the canal, and that came from our profit," Robin Loudermilk says. "[The employees] didn’t lose anything. We reinstated them to get them back in business. We took a pretty good lick during all of that, but we’re a better company for it."

That kind of people-centered approach has served the company well over the decades. Charlie Loudermilk estimates that out of its 40-plus-person management team, "we’ve maybe lost one or two over the last 10 years. For some people, this is the only job they’ve ever had. I’m very proud of that."

Virtually every company in the American marketplace is going to pay lip service to employee value and retention, but Aaron Rents seems to mean it. Just recently, Charlie Loudermilk made a direct appeal to laid-off Circuit City workers to come to work for Aaron Rents. One day after the company announced the layoffs of 3,400 workers, Loudermilk posted the following on its recruitment Web sites: “Attention Circuit City employees: So they say you make too much and are laying you off to hire lower paid employees? Aaron’s doesn’t lay off our highly paid employees ... We put them on a pedestal, and show others how they can make more.” Loudermilk also went on record at the time, wondering why Circuit City would lay off so much of its workforce to simply replace them with lower-salaried personnel.

That kind of approach is going to be more and more crucial as Aaron Rents grows, and the need to attract and recruit employees becomes more important. Aaron Rents now employs more than 8,000 people. Floor salespeople start at $9 an hour, and management trainees at about $40,000.

While employee salaries have kept pace with the times, so has Aaron Rents’ supply of merchandise. “Between when I started the company and now, there is really no comparison,” Charlie Loudermilk says. “Money is so much freer now than it was. We’d have four girls come in to furnish a two-bedroom apartment, and it’d cost about $35 a month. Now, that same thing would probably cost $135 a month.

“TVs have become big business today (big-screen TVs are now the company’s No. 1 rental item). Back then we weren’t doing any electronics like that. We now have 130,000 computers out there on a 12-month plan. We have nine manufacturing plant and 18 large distribution centers around the country. We got into manufacturing because we needed the supply of products.”

The company’s MacTavish Furniture Industries produced $80 million in furniture last year. The company’s own production facilities and fulfillment centers across the country means its stores can operate with lower inventory and still offer quick delivery.

More than half the company’s store rental revenue last year — 52 percent — was for electronics such as TVs and appliances, 35 percent for furniture and 12 percent for computers. The company has worked out an arrangement with Dell Computer, which sends Aaron Rents the customers it turns down because of credit issues.

An even more striking sign of the times is RIMCO, a chain of stores the company launched in 2005, which are aimed at consumers who want to trick out their cars with custom wheels. The aftermarket automotive market has grown to more than $30 billion in the last decade.

“I once thought if I made a million dollars in rental income I’d be the biggest guy in Buckhead,” Charlie Loudermilk says. “And we just did $2 billion in the last fiscal year.”

The Loudermilk influence is indeed felt in Buckhead, where the company operates out of an 11-story building at the corner of E. Paces Ferry and N. Fulton streets. Charlie Loudermilk is intent on remaking Buckhead into a more family-friendly community, and Robin Loudermilk has taken on the leading role in a movement to make the village safer.

Both men are putting their money where their mouth is. Among other projects, the elder is footing the bill for a new, $1 million Buckhead clocktower at the intersection of Peachtree and Roswell roads. The three- to four-story chiming clock would be built in Triangle Park, across from The Roxy Theatre. Loudermilk owns the block of Roswell Road adjacent to the park, including the Roxy, which he plans to renovate.

“Buckhead needs a signature,” Charlie Loudermilk says. “How do you know when you get to Buckhead? The Roxy is the really the only historic thing in Buckhead, and we think of this area as a small community.” The elder Loudermilk developed a fondness for clock towers while a student at The University of North Carolina-Chapel Hill, where classes would change to the sounds of chimes, and the bell tower was a popular landmark. Such a fan was Loudermilk that several years ago, he installed chimes atop his headquarters.

The clock tower proposal comes amid an overall Buckhead revitalization. Most notable is Ben Carter Properties LLC’s planned $800 million mixed-use “Buckhead Avenues” project. The development represents an overhaul of an area once dominated by Buckhead nightclubs and replacing them with retail, hotel, boutique office space and residential offerings.

“Both my dad and I were born within five miles of this area,” Robin Loudermilk says. “And we’v e seen how it changed. Under the last mayor we had [Bill Campbell], things took a turn for the worse. I showed up one day at the office, got out of my car, and stepped on a hollow-point bullet, right in my parking place. You know, that’s my turf. That’s my place. It really brings it home. So a group of folks and I got together and said, ‘We’re going to put a stop to this.’ We passed the hat and formed the Buckhead Alliance.”

Like his father, Robin Loudermilk anted up with the cash to get the organization moving, putting in $300,000 of his own money, and he keeps the bullet in his office as a reminder of what’s at stake. The Buckhead Alliance is a nonprofit civic improvement organization founded two years ago as a step toward creating a more marketable village.

“There are 58 cameras now in Buckhead, focusing on where the crime is happening, which is out in the parking lots and the streets,” Robin Loudermilk says. “There are 148 property owners here, and a lot of it is peer pressure, getting them to support what we’re trying to do. At one time, we had the FBI, the GBI, the DEA, the ATF and the APD monitoring
these cameras, and they took down a pretty well-organized gang.”
That gang, the Black Mafia Family, ran a sophisticated cocaine ring that laundered $270 million over 15 years through Atlanta, Detroit, and cities in nine other states. Authorities allege that the Atlanta operation trafficked 2,500 kilos (more than 5,500 pounds) of coke per month across the Eastern seaboard. BMF members reportedly acted as bodyguards and enforcers for hip-hop figures.

Soon after he found the hollow-point bullet, Robin Loudermilk and 10 other property owners started the Buckhead Alliance, which went directly to landlords and, with some success, asked them to stop renting to tenants whose financial legitimacy couldn’t be proved. They raised more than $100,000 in private funds to install the high-tech surveillance cameras, which now record 95 percent of the community’s public areas. Officers monitor the 24-hour surveillance feeds at the mini-precinct that the Alliance built for police on Peachtree Road. Crime has dropped by more than 30 percent since the cameras were installed, police say.

Robin Loudermilk predicts that, “within the next six months, we’ll see a lot of these older, dilapidated buildings torn down and redeveloped.” And the Loudermilk influence will continue on for more generations of Atlantans.