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The Fort Worth-based pawnshop chain also said it expects fiscal 2009 earnings of $3 to $3.08 per share, up from $2.70 the year before, and forecast earnings in fiscal 2010 of $3.45 to $3.60 a share. Its shares (ticker: CSH | Quote | Chart | News | PowerRating) jumped more than 7 percent, up $2.15, to close at $33.25.
Cash America earned $22.5 million in the quarter, or 73 cents a share, beating analysts' averaged estimate by a penny.
While the lender doesn't expect any marked improvement of consumer confidence soon, CEO Daniel Feehan told analysts that the company believes its "U.S. pawn business will continue its current growth trends, and we will continue to augment any softness in retail demand with the sale of refined gold."
Significantly, payday lending rose in Ohio, where a 2008 state law capped interest charges on the cash advance loans at 28 percent, down from a previous maximum of 391 percent. Payday loans in the state were up 16 percent, said Thomas Bessant Jr., chief financial officer.
Cash America also added a new mix of services at its Ohio payday loan storefronts, including gold buying and pawn loans on jewelry, the company said. The sidelines proved successful, prompting their introduction at some stores in Indiana, Kentucky, Michigan and Texas, Bessant said. But he said "another effective [payday] prohibition bill has been filed" in Ohio.
Feehan told analysts that Cash America is developing new products for customers "a little bit above the socioeconomic scale that we typically operate in." These consumers no longer have credit cards or have had their limits slashed by their banks, creating opportunities, he said.
"A number of those folks are going to be looking for alternatives, and I've challenged our team internally" to find a way to capture them with new product offerings, he said.
BARRY SHLACHTER, 817-390-7718
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