Pawn Shop Company Sees Profit in Expanding to Provide Payday Loans, Cash Advances
By J.J. CameronPayday Loan Writer
Pawn shops? Those are SO a few years ago.
That was essentially the line of thinking for Ezcorp, a business that stuck solely to this industry until a recent expansion into the world of fast payday loans.
Over the last fiscal year, the company has opened more than 100 payday loan stores, referred to across the nation as Ezmoney stores. Another 115 are planned for this fiscal year, which ends in September. The plan is to run 350 payday advance loan locations by 2007.
A profitable payday loan world: While the pawn business remains the company's largest revenue generator, Ezcorp's payday loan and credit service revenue nearly doubled in the first quarter of 2006.
These figures ought to receive a further boost as new bad credit payday loan stores mature, says analyst Richard Eckert of Roth Capital Partners. It takes 18 months for new stores to get their loan balances up to $80,000, the point at which they become profitable.
"You have a large number of stores that are just coming into their own as we head into fiscal 2007 and beyond," Eckert said. "For fiscal 2007, they don't have to add a single store to exhibit above average (earnings) growth."
Most of Ezcorp's stores are in Texas, though the percentage of stores that are in the Lone Star State is dropping as the firm expands into states such as Colorado, Utah and Wisconsin. The idea is to offer payday advances in as many areas as possible as time goes on.
