Tag: pawn shop


Pawn Shops and Payday Loans: No Recession Here

In spite of all the doomsayers out there, payday loan companies, pawn shops, and car title loan companies are doing just fine thank you.

Zack’s Investment Research correspondent Tracey Ryniec wrote an interesting analysis of EZPWN recently. Basically she says, “EZCORP, Inc. (EZPW) is riding high as the pawnshop business booms during the economic slowdown. The company recently acquired an additional 67 pawnshops to expand its reach in Florida. EZPW is trading at 10.18x forward earnings.”

As many of our readers know, EZCORP operates payday loan stores and pawnshops in the U.S. and Mexico. EZCORP has  890 locations, including 412 pawnshops, with 371 in the U.S. and 41 in Mexico, and 478 loan stores in the U.S.

Ms. Ryniec goes on to write, 

“Revenue Jumped 23% in Fiscal 2008

On Nov 6, EZCORP announced fourth-quarter and 2008 full-year earnings that met Wall Street estimates. For the fourth quarter, net income rose 44% to $16 million from $11 million in the year ago period.

Revenue grew 19% to $123 million. The pawn operations were the engine of growth in the quarter. It was the 25th consecutive quarter of year-over-year earnings growth.

Fiscal 2008 net income climbed 38% to $52.43 million, or $1.21 per share, from $37.87 million, or 88 cents per share, for the 2007 period. Revenue rose 23% to $457 million.

First-Quarter and Full-Year 2009 Guidance

EZCORP issued first quarter 2009 and full-year earnings forecast of 35 cents and $1.45 per share, respectively. The company is scheduled to report first-quarter earnings on Jan 22.”

She sums up,

“Full-year 2009 estimates, however, have risen 5 cents to $1.50 over the same period, which is higher than the company’s guidance. Analysts expect 2009 year-over-year earnings growth of 25.84%.”

One thing that amazed us was the following:

EZCORP also closed on a $120 million credit facility, consisting of a $40 million term loan and an $80 million revolving line of credit. As of the closing, the company only borrowed $40 million, leaving $80 million of the credit line available for future use.”

No problems with access to capital experienced in this industry!

Read the article in it’s entirety here: Zack’s Investment Research

We HIGHLY recommend you listen to EZCORP’s  conference call scheduled for January 22, 2009. Go here PaydayLoanIndustry.com and scroll to the very bottom to get to their link to the investors page where you can sign up free. This is a MUST!


2009 Payday Loans, Car Title Loans & Pawn Shop Resolution

Like most prognosticators, we expect 2009 to be a very tough year for jobs. Unemployment will certainly increase; 10% or higher wouldn’t surprise us.

But, like they say, where disaster lurks opportunity reveals itself IF you’re a “glass half full” kinda fellow.

So, in the payday loan, car title loan, rapid tax refunds, and pawn shop industries expect 2009 to experience increased demand for our products followed by a focus on collection activities.

After all, it doesn’t help much if your customers clamor for your products but are unable to pay you back in a timely manner.

Remember, it’s “all about the job”. Construction, retail and service jobs are at risk in most geographic locations. Are you up to date on what’s going on in your community? Do you know which companies are laying off and which ones are growing?

As I write this I’m in Clarksville, TN. I’ve been visiting with family and meeting with clients in car title lending and payday loans. I picked up a local newspaper and on the front page is an article about a $1.2 billion dollar polycarbonate factory coming to town. 1000 construction jobs until the factory is scheduled for completion in 2012. Then 500 manufacturing jobs will result with an estimated 8 more related jobs for every 1 factory job created by this project.

And yet, many of the small business men I’ve spoken to here are unaware of this development. You can bet the manager of the TitleMax store knows about it. In fact I went over and met with him. It wasn’t long before we began to discuss it’s implications on his business.

The point? Resolve in 2009 to always know what’s going on in your community. Join at least on of the local business organizations. Read your local paper every day. Join a charitable group.

Get involved! You’ll be glad you did. Not only will you profit but more importantly you’ll feel better!!



Even the Rich Using Pawnshops! Are Payday Loans Next?

The Royal Pawn & Jewelry location in Royal Palm Beach, Florida is experiencing record transactions in high-end jewelry, fine art and automobiles.

Thanks to our current economy and the arrest of ponzi-king Bernard Madoff, or should we say “made-off as in made-off with all our money”, even the very rich are heading to their local pawnshop to make it through the week.

Levi Touger, co-owner of Royal Pawn & Jewelry, said big ticket items, including more than one ferrari and several yachts, are finding their way to his pawn shop. Having lost millions with Madoff, these “Royal Palm Beachers” need to get their hands on cash quick!

I sure hope the Palm Beach payday loan stores are stocking up on cash as well. I wouldn’t want the poodles in the area to want for their weekly shampoo.

Oh, if you’re planning to head over to Levi’s place for a deal on a 10 carat diamond ring, better wait. Florida state law requires pawn shops to provide 60 days for owners of pawned items to redeem them.



Payday Loans, Car Title Loans, Check Cashing … Is It All Too Much?

It’s difficult, to say the least, when you attempt to enter multiple new markets at the same time.

We’re amazed at the number of entrepreneurs we hear from on a daily basis who want to learn how to run a payday loan business, a car title loan business, a check cashing store, a pawn shop, and even RAL’s (rapid tax refunds) all at the same time.

To industry outsiders, these businesses appear to be roughly the same. But to those of us actually in these industries this couldn’t be further from the truth.

Regarding payday loans , auto title loans , check cashing, pawn shops, gold buying and selling , installment lending, RAL’s, etc. you must deal with compliance issues, customer demographic differences, state/province legislation, licensing, employee training, point of sale materials, signage, software and more.

Consider this Press Release:

First Cash announces disposition of automotive operations
First Cash Financial Services, Inc. Monday announced that the operations of its Auto Master buy-here/pay-here automotive business unit have been assumed by Interstate Auto Group, Inc., a multi-state buy-here/pay-here operator doing business under the name CarHop. Terms were not disclosed.

As previously announced in September, First Cash decided to exit the buy-here/pay-here automotive business through the sale or liquidation of its Auto Master business unit. Under the terms of this agreement, CarHop purchased Auto Master’s automobile inventories, assumed leases at all existing dealership locations and hired a significant number of Auto Master’s personnel. In addition, CarHop will manage the collection of Auto Master’s outstanding portfolio of customer notes receivable under a fee-based agreement. CarHop is a privately-held buy-here/pay-here operator based in Minneapolis, Minnesota, which has been in business since 1996 and currently operates 24 auto sales locations in six states.

Rick Wessel, CEO of First Cash, said, “This transaction provides a timely and effective means for First Cash to exit the automotive business. We have liquidated our inventories for what we view to be a fair price and we expect to realize significant future cash flow from the collection of our existing notes receivable portfolio. The collection services aspect of the contract with CarHop provides a mechanism to collect on the existing portfolio of notes receivable and related finance charges through CarHop’s continued operation of the dealerships and collections operations. CarHop is an established industry operator with the ability to maximize the collections on this portfolio over the next 24 to 30 months.”

According to Wessel, “The cash flow and related tax benefits resulting from this transaction will support the continued expansion of First Cash’s pawn operations in Mexico and the U.S. and allow us to further reduce our outstanding debt. Looking ahead, our energy and resources will now be focused exclusively on our core pawn and short-term consumer lending businesses. These operations continue to be highly profitable, generate significant cash flow and provide opportunities for continued growth and profitability.”

Of course, the press release doesn’t reveal some of the internal problems First Cash experienced with their automotive operation. But suffice it to say, the obstacles outweighed the potential for profit in an extremely lucrative business!

The big guys face the same challenges the little guys face. It’s really tough to make money in all these businesses UNLESS you address them one at a time. Even having a team comprised of pros with significant experience in a niche . Even having pros on your team with significant experience is no guarantee of success. You still must train your employees to sell and support the product and educate your customers as well.

So… pick a niche, learn the ropes, understand and appreciate the startegies and tactics, get your systems in place, and only then dip your toe in the water.



Pawnshop Launches Internet Business

You’ve got to admit that we in the “sub-prime” financial services industry are a creative lot!

http://www.pawntique.com/ has come up with what we think is a great idea; an Internet based pawn lending business.

They make loans on jewelry, watches, gem stones, gold and memorabilia at a rate of 4% to 6% per month. The rate for loans from $1800 to $180,000 is 6% paid monthly. Loans of $1799 and less are 4% per month.

They appear to be the first true Internet pawn lender. Here’s how it works:
1) You go to their web site and select a category; watches for example
2) You estimate it’s market value, enter a description, post a picture if you wish…
3) You get an immediate estimate of the amount they will loan you
4) You then provide them with your contact info and ID.
5) They pay for a courier service to pickup your item
6) They inspect it and if both parties agree on the value they ACH the funds into your bank account. Typically they loan 40% of this value.
7) You pay 4% to 6% monthly interest.
8) At the end of 6 months you pay off the loan with interest and a “redemption fee” and they ship your item back by courier.
9) If you fail to repay the loan they sell the item

It’s discrete, convenient, there are no questions, no credit checks, and fast.

We like this business model!

Oh, and one more thing. It’s only available in England currently.

Which of us will be the first to launch a Internet based online pawnshop?