(Reuters) - Activist investment fund Engaged Capital LLC urged the board of furniture retailer Rent-A-Center Inc (O:RCII) to start evaluating strategic alternatives, including a potential sale of the company.
Rent-A-Center shares rose as much as 5.3 percent to $8.90 on Tuesday.
The rent-to-own retailer, which reported its fourth-quarter results on Monday, has seen declining sales for over a year.
Rent-A-Center's shares have declined 75 percent over two years under the current board, Engaged Capital said.
The company's Chief Financial Officer Guy Constant resigned in December and Maureen Short was appointed as the interim CFO.
"Interim management (of Rent-A-Center) stated the turnaround could take 12 to 18 months. Even under a favorable operating environment, there is no shortcut to returning to growth given the nature of this business," Engaged Capital founder Glenn Welling wrote in the letter.
The activist fund said it was prepared to nominate independent directors at the company's annual shareholder meeting.
The fund has a 12.9 percent stake in Rent-A-Center, according to the letter.