* Company outlines steps for turnaround plan
* Activist investors call plan risky
* Investors also against company's CEO choice
* Co forecast 2018 EPS above estimates
* Shares up as much as 9.4 percent (Adds Rent-A-Center's response to Marcato Capital's letter, updates shares)
April 10 (Reuters) - The pressure on Rent-A-Center Inc to auction itself increased on Monday after Marcato Capital joined fellow activist investor Engaged Capital to force the rent-to-own furniture retailer to pursue a sale rather than a "risky" turnaround plan.
Earlier in the day, the company said it would not sell itself, and instead outlined steps to boost profits and said founder Mark Speese, its interim CEO since January, would take over the role full time – moves that have not gone down well with either activist investor.
The company said it plans to boost profit by improving pricing, boosting the number of customers who ultimately own its rented furniture, expanding its e-commerce offerings, selling more high-end products and "rightsizing" its workforce, among other moves. It also forecast 2018 profit well above analysts' expectations.
Rent-A-Center's shares were up 8 percent, adding to their 14 percent gain since mid-February, when Engaged Capital first called for a sale. The company instead pushed its turnaround plan.
Engaged Capital, which has a nearly 13 percent stake in Rent-A-Center, responded by waging a proxy fight to gain control of the board, which it accused of acting based on "personal loyalty" to Speese, who is also chairman. It called the company's latest plan a "high-risk path".
Marcato Capital Management LP, which said it owns 4.9 percent of the company's shares, said it believes Speese "does not intend or desire to be the CEO for the long term."
"If the Board continues to resist a process to review strategic alternatives now, Marcato plans to vote for Engaged's director nominees at the upcoming annual meeting," the hedge fund manager wrote in a letter to Rent-A-Center's board.
The company said Engaged Capital's pursuit of a "quick flip", seeking a sale when its shares were at multi-year lows and while it was in the midst of a turnaround, would "limit the value creation opportunity for all stockholders."
"We are confident that executing the initiatives announced today will drive enhanced stockholder value. The Board will continue to evaluate opportunities with the assistance of its independent financial and legal advisors," a spokesperson for Rent-A-Center told Reuters.
The company said it expects these steps to result in a profit of $1.20-$1.40 per share and sales growth in the low-single digits for 2018.
Analysts on average were expecting a profit of 99 cents per share and sales growth of 2.4 percent, according to Thomson Reuters I/B/E/S. (Reporting by Sruthi Ramakrishnan in Bengaluru, Additional reporting by Gayathree Ganesan; Editing by Savio D'Souza)