Cash America 2015 Annual Report Download - page 49

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increased to 29.2% in 2015 compared to 28.3% in 2014. The increase in total domestic gross profit margin was
primarily due to the increase in retail gross profit as a percentage of total gross profit.
In 2015, commercial disposition activities represented less than 5% of aggregate gross profit from
disposition activities. Management expects commercial sales to continue to be a less meaningful aspect of the
business as the Company focuses its efforts on the successful disposition of merchandise through its pawn lending
locations.
In 2015, management continued to place emphasis on the discounting of merchandise, particularly non-
jewelry items, in an effort to reduce the levels of non-jewelry merchandise held for more than one year. This effort
resulted in relatively low gross profit margins on retail disposition activities, which have been near historical lows
in recent periods. In the seasonally strong holiday selling period in the fourth quarter of 2015, the Company
experienced increased retail gross profit margins, which were primarily due to higher profit margins on the sale of
jewelry items. Management believes that an increased amount of jewelry sales as a percentage of overall retail sales
has the potential to further improve overall retail gross profit margins gradually over time.
The table below summarizes the age of merchandise held for disposition related to the Company’s domestic
pawnlendingoperationsasofDecember31,2015and2014,respectively(dollarsinthousands):
As of December 31,
2015 2014
Domestic pawn operations Amount % Amount %
Jewelry – held for one year or less $135,215 55.3%$ 111,963 52.0%
Other merchandise – held for one year or less 93,498 38.3%90,642 42.1%
Total merchandise held for one year or less 228,713 93.6%202,605 94.1%
Jewelry – held for more than one year 8,935 3.7%3,494 1.6%
Other merchandise – held for more than one year 6,701 2.7%9,150 4.3%
Total merchandise held for more than one year 15,636 6.4%12,644 5.9%
Merchandise held for disposition, gross $244,349 100.0%$ 215,249 100.0%
Less: Inventory valuation allowance $(2,800)$ (2,400)
Merchandise held for disposition, net of allowance $241,549 $ 212,849
Merchandiseheldfordisposition,netofallowance,increased$28.7million,or13.5%,asofDecember31,
2015 compared to December 31, 2014. The increase was primarily due to an increase in jewelry inventory as a
result of the Company’s continued emphasis on retail disposition of jewelry in stores and efforts to place less
reliance on the commercial disposition of jewelry. The allowance for merchandise held for disposition increased by
$0.4millionfromDecember31,2014toDecember31,2015,primarilyduetoincreasedinventorylevels,aswellas
the Company’s historical experience of inventory losses due to damage, theft or obsolescence.
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