Cash America 2001 Annual Report Download - page 5

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million, a small part of the estimated $15 billion volume of the entire
payday advance industry in the U.S. However, this volume is certainly
significant to Cash America, as it would represent approximately 20%
to 25% of total loan volume in our U.S. shops.
One of the most encouraging aspects of this program has been
the introduction of scores of new customers to Cash America. We
have experienced some crossover from our traditional pawn loan
product to payday advances, but our data shows the majority of
payday advance customers are faces we have not seen before. These
new faces are being introduced to our other products and services.
Our expertise in the payday advance business has not yet matched
the skill level of pawn lending, but we are confident it will rise to the
level of a core competency for Cash America by the end of 2002.
Further reflection upon our activities in 2001 will ultimately
wind its way back to the failed ventures mentioned in the opening
paragraph. While I find no need to rehash the travails of bold
expectations and dashed dreams, I do believe you have a right to
demand an explanation of what your management team has learned
from these diversions beyond the roots of our core business. I have
reached further back into the archives for another quote summarizing
the simplicity of that lesson. The ancient Chinese philosopher Lao-tzu
is quoted in the sixth-century B.C. as having said, “He or she who
knows enough is enough will always have enough.” Loosely applied,
we have learned our fortunes lie within the hard-earned expertise of
offering capital alternatives to the under-banked segment of the
population and not within the lure of new businesses that are never
quite as simple as they seem. Fortunately, we concluded we had
enjoyed “enough” of these new ventures at a point in time when we
still had “enough” of our old business to reshape our goals on a solid
foundation.
Retrenchment to our traditional lending business should not be
viewed as a retreat from new ideas and opportunities. We have not
lost our spirit for growth, or our appetite for risk. The renewed focus
only sharpens our vision of what opportunities best fit our core
expertise, and therefore what opportunities are most likely to succeed.
The payday advance product is a great example of a new idea closely
aligned with our core expertise. So are the expansion of retail activity
at Harvey & Thompson and the introduction of variable loan terms at
Svensk Pantbelåning. None of these ideas are immune to risk. But
these are risks we know how to manage. Risks, if manifested, should
only result in lost opportunity, not a loss of capital.
So, do we believe a “return to our roots” strategy can drive
long-term share appreciation? Will the traditional pawn business
continue growing within the neighborhoods we now dominate? Are
there enough new opportunities aligned with our core expertise to
provide sustainable earnings growth at a rate coveted by value
investors? Is our story exciting enough to energize new institutional
investors recently stung by two years of widespread portfolio
declines?
These are questions you
should be asking us —
questions we are definitely
asking ourselves. The answers
are not easy and the future is
not crystal clear. What we can
tell you with certainty is that our
story has been simplified by
narrowing the breadth of
business activities and reducing the number of moving parts. The
market we serve and the products we provide are easy to grasp — no
fancy technology, no revolutionary business ideas. We operate a cash
flow business demanding focus and everyday execution.
Demand for pawn loans should strengthen as the economy
readjusts to more traditional GDP growth rates. New opportunities for
additional products and services are clearly within our reach. Money
transfer, check cashing, bill payment, prepaid telephone service and
refund anticipation loans are all included in a growing list of
opportunities. The goal is to subtly transform the image of our
operating unit from a pure pawnshop outlet to a neighborhood
financial service center.
Strengthening loan demand and new products alone will not
drive the growth we need. We must also extend our geographic reach
into markets not currently served by Cash America. Options for
expansion include opening new units, further consolidation within
the pawnshop industry and even the acquisition of independent
payday advance companies. We will be considering all these options
in 2002.
The excitement in our story will come with execution and
performance. We are clear about the challenges ahead of us.
Thanks for your continuing support.
Daniel R. Feehan
Chief Executive Officer
“The renewed focus
only sharpens our
vision of what
opportunities best fit
our core expertise.”