No mere pawn in the game, EZCORP is one of the nation's largest operators of pawnshops. The company operates more than 400 EZPAWN and Value Pawn locations in the US and more than 175 stores in Mexico under the Empeño Fácil and Empeñe Su Oro brands. EZCORP also offers customers unsecured loans, commonly referred to as payday loans or payroll advances, through some of its pawnshops and from more than 430 EZMONEY stores in the US and 60-plus locations in Canada under the CASHMAX and Cash Converters banners. EZCORP also issues larger, longer-term consumer installment loans and loans secured by automobile titles. It also loans money via the Internet through its 2013 acquisition of online lender Go Cash.
Most of the company's EZMONEY stores are located in Texas, the company's largest market by far. These locations ceased marketing payday loans and instead began providing fee-based advice and third-party loans in 2005. The company doesn't actually make or fund these loans, but typically earns a fee of 20% on each loan amount. If a borrower defaults on his or her loan, EZCORP pays the lender the principal and accrued interest, plus an insufficient funds fee. The company then attempts to collect these monies from the borrower.
EZCORP's pawnshops feature a retail ambience intended to dispel the industry's seedy image. The stores offer standard pawnshop fare, such as second-hand jewelry, tools, electronics, sports equipment, and musical instruments. Their inventory is built from items forfeited by customers who used them as collateral for small, short-term, high-interest loans. The stores' services come at a price: monthly interest rates of up to 20% on loans that typically range from $80 to $120 and reach maturity in up to seven months. Some three in four borrowers redeem their property or renew or extend the terms of their loans. About a third of the company's revenues come from reselling forfeited merchandise.
EZCORP owns a noteworthy portion of international pawnshop operators Albemarle & Bond (UK) and Cash Converters International (Australia), upping its stake further in Cash Converters in 2013. EZCORP has targeted Mexico for growth. To this end, it has added more than 150 locations since opening its first store there in 2006 and plans to continue to open about 50 or 60 more. In 2012 the company acquired 60% of Crediamigo, a provider of payroll deduction loans in Mexico.
In 2009 EZCORP established its first two payday loan stores in Canada under the CASHMAX brand, then added about 50 more in fiscal 2010 alone. It acquired the rights to the Cash Converters name in that country in 2011 and is rebranding most of its existing branches. It is also adding the buying and selling of second-hand goods in Canada.
EZCORP also continues to build its US pawnshop empire through acquisitions. Buying online lender Go Cash in 2013 gave EZCORP a leg up in Internet lending while it works to expand its stores network in Arizona through its purchase of a dozen USA Pawn & Jewelry shops there. Previous purchases include its 2011 acquisition of 30 Mister Money pawn stores in Iowa, Illinois, Wisconsin, and Texas; and seven Jumping Jack Cash stores in Salt Lake City. In 2010 the company bought some 15 pawnshops in Florida, Illinois, Nevada, and Texas from separate sellers, including its first five locations in Chicago.
Since regulation of payday lending is in flux and varies from state to state, EZCORP is often compelled to exit or reduce its presence in markets such as Colorado and Wisconsin when new laws that restrict the company's activities are enacted. In order to reduce its reliance on payday lending, the company has added services in recent years such as auto title lending, fee-based credit consulting, and jewelry scrapping.
The latter addition has particularly paid off for EZCORP as jewelry scrapping now accounts for nearly a quarter of revenue. The company's bottom line has increased each of the last four years, fueled by increases in same-store sales, as well as by acquisition-related expansion and new store openings. – less