Cash America 2010 Annual Report Download - page 8

surprisingly quick growth, particularly
in the UK. With modest investments
to customize our U.S. online lending
platform, we have now extended our
reach into three foreign countries and
created an international presence that
I argue should add $3 to $4 of value to
our share price today.
Looking forward, both segments
of our business should benefit from
resurging consumer confidence and job
gains. These factors typically fuel loan
demand, which is the lifeblood of our
business models.
The Retail Services Segment enters
2011 with additional new momentum
provided by the fourth quarter 2010
acquisition of 39 Maxit Pawn locations
in Washington State and Arizona, and
a new strategy for enhancing the value
of our operation in Mexico. Additionally,
new installment loan and auto equity
loan products first deployed in selected
locations in 2010 are showing early
promise and will be more broadly
distributed in 2011. Furthermore, we
intend to support all product offerings in
the Retail Services Segment with more
aggressive advertising and promotional
campaigns than we have utilized in the
past few years. These campaigns will
touch our core legacy pawn shops as
well as the many consumer loan outlets
we have successfully repositioned to
offer both consumer loans and pawn
products. The Retail Services Segment
will also be adding new locations in both
the U.S. and Mexico in 2011.
The E-Commerce Segment enters
2011 with a significant draft from the
tailwinds I discussed above. We expect
to continue seeing new customers
utilizing our online services in the U.S.,
but also expect growth in our foreign
online business to outpace domestic
expansion. In addition, this segment will
be focused on re-launching its Micro Line
of Credit services, expanding its nascent
installment loan products into new states
in the U.S. and promoting its recently
deployed installment loan product in the
UK. We know the unmet demand for
short-term consumer credit will continue
to beg for innovative electronic solutions
that will undoubtedly present new
opportunities for our online platforms.
I mentioned at the outset of this
message that I would return to the topic
of share valuation. And while I believe
our shareholders have fared well in
relation to the major indices over the
past few years, I have recently been
troubled by an emerging valuation gap
between Cash America and a few of our
peer competitors. I believe a portion of
this discount relates to the uncertainty
surrounding the future activities of the
new Consumer Financial Protection
Bureau (our “exposed” revenues are a
higher percentage of total revenues than
our competitors’); a portion deservedly
relates to our missteps in Mexico (which
we are currently addressing with a new
strategy and new management); and a
portion may relate to our comparative
leverage ratios (our ratios continue to
provide us more-than-enough liquidity to
pursue our strategic plans). I understand
these concerns and agree that some
discount is appropriate, but I must
confess that I don’t understand the
depth of the discount that developed in
the latter half of 2010.
I will also confess that I absolutely
believe the market is generally efficient
in valuing companies over the long term;
and a company’s management team is
responsible for developing, executing
and communicating a sustainable
strategy for building shareholder value.
So if an unwarranted valuation gap
exists, we have nowhere to hide. Our
responsibility to you is to close that gap,
and we are committed to that task.
Importantly, I do believe Cash
America has a clear and appropriate
vision for creating future value. The
cornerstones of that vision will continue
to include (1) expanding our footprint of
pawn shop units throughout the U.S.,
Mexico and Latin America; (2) expanding
the reach of our online platform into
new international markets; (3) enhancing
marginal profitability of existing
businesses through training, promotion
and technological innovation; (4) creating
and/or nurturing the development of new
financial products for both our traditional
consumers and the emerging class of
newly disenfranchised bank customers;
and (5) attracting and developing the best
management talent in the industry.
I have always told our team
that performance will ultimately be
recognized and rewarded by the market.
The path to greater shareholder value is
clear, and it is our responsibility to deliver
the performance you expect from us.
Thanks for your ownership and
ongoing support.
Daniel R. Feehan
Chief Executive Officer and President
March 2011
4
                               