Fort Worth-based Cash America International Thursday reported a 20 percent drop in its fourth-quarter net income after it stopped offering loans in some stores and lower gas prices resulted in fewer loan-seeking customers.
Net income for the pawn shop operator for the three months ending Dec. 31 was $22 million, or 75 cents a share, compared to $27.2 million, or 91 cents a share, in the year ago quarter. But revenues totaled $289.4 million in the quarter, compared $271 million in the fourth quarter of 2013.
“Retail sales in our pawn locations posted an increase of 16 percent during the important holiday selling season, which was our primary objective coming into the quarter,” CEO Daniel Feehan said in a statement. “While I’m pleased with the growth in net earnings in the fourth quarter compared to the prior year, a lot of the progress is obscured by our strategic decision to de-emphasize unsecured consumer loans in our business.”
Shares of Cash America (ticker: CSH) closed Thursday at $20.75, up $1.11.
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During 2014, Cash America spun-off an 80 percent stake in Enova, its online subprime lending unit, sold its Mexico operations and closed a number of stand alone consumer loan shops.
In the last half of the year, Cash America stopped offering unsecured consumer loans at 300 locations. Doing so cost the company $3.1 million in fees, said Tom Bessant, Cash America’s chief financial officer, in a conference call with analysts.
But, lower gas prices also contributed to the revenue decline and “had a larger influence on our customers disposable income and correspondingly their demand for loans,” he said.
Cash America has 859 stores in 21 states and 84 check cashing centers in 12 states. The company said it expect to open “a small handful” of new stores this year.
Sandra Baker, 817-390-7727