Cash America 2013 Annual Report Download - page 91

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the inventory turnover ratio as more goods will be available for sale in retail services locations.
The total proceeds from disposition of merchandise decreased $108.3 million, or 15.4%, in 2013 compared to
2012. Total gross profit from the disposition of merchandise decreased $40.8 million, or 18.1%, during 2013 compared
to 2012. The overall gross profit margin percentage decreased to 31.0% in 2013 compared to 32.1% in 2012, primarily
due to a decrease in gross profit margin on commercial sales. The consolidated merchandise turnover decreased to 2.4
times during 2013 compared to 3.0 times in 2012, primarily due to management’s decision to emphasize retail
disposition activity rather than the Company’s recent practice of disposing of a higher volume of merchandise through
commercial sales. Commercial sales typically have a higher turnover rate than retail sales.
Proceeds from retail dispositions of merchandise increased $36.1 million, or 9.2%, during 2013 compared to
2012. Proceeds from retail dispositions in domestic retail operations increased $42.9 million, primarily due to
management’s emphasis on retail disposition activity and the addition of retail services locations through acquisitions
and de novo store growth. Offsetting this increase was a $6.8 million decrease in retail sales proceeds from foreign retail
operations, mainly due to the closure in 2012 of pawn lending locations in Mexico as part of the Mexico Reorganization.
Gross profit from retail dispositions increased to 82.1% of total gross profit in 2013 compared to 63.9% in 2012,
primarily due to the shift to emphasize more retail disposition activity over commercial sales activity. Consolidated
gross profit from retail dispositions increased $7.7 million, composed of a $10.2 million increase from domestic
operations, offset by a $2.5 million decrease from foreign operations. Total retail gross profit margin decreased to 35.5%
in 2013 compared to 36.8% in 2012, primarily due to management’s discounting of merchandise to encourage retail
sales activity.
Proceeds from commercial dispositions decreased $144.4 million, or 46.3%, during 2013 compared to 2012.
Proceeds from commercial dispositions from domestic operations decreased by $123.3 million, primarily due to a
decrease in the volume of gold sold as part of an effort to place a greater emphasis on retail disposition activity,
decreases in the market price of gold sold and the volume of jewelry forfeitures of collateral and jewelry purchased
directly from customers. Foreign operations contributed $21.1 million of the decrease, primarily due to the closure of
pawn lending locations in Mexico as part of the Mexico Reorganization. Consolidated gross profit from commercial
dispositions decreased $48.4 million, mainly due to lower gross profit in domestic operations. The decrease in
consolidated gross profit margin from commercial dispositions, which was 19.7% in 2013 compared to 26.1% in 2012,
was mainly due to a lower volume of gold sold and a decrease in the market price of gold sold.
In future periods, management expects the ratio of commercial sales to total sales to remain consistent with
current levels as part of the Company’s initiative to increase retail sales of jewelry in its retail services locations.
Management expects to experience lower levels of gross profit margin on retail dispositions, particularly in some
categories such as consumer electronics, which could reduce retail gross profit margins in future periods. Management
also expects gross profit margin on commercial dispositions to be slightly lower than current levels in future periods,
mainly due to lower prevailing market prices for gold compared to the prior year. The combination of these factors is
expected to lead to lower overall gross profit margin in future periods.