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01/28/2014

First Cash shares fall as earnings lag Wall Street estimates

Arlington-based First Cash Financial Services saw its shares fall about 7 percent in early trading after its fourth-quarter 2013 earnings were slightly below financial analysts' consensus estimate and its 2014 forecast was well short of expectations. The operator of U.S. and Mexican pawn shops and other lending services said it earned $24.8 million in the quarter, or 84 cents a share, including the cost of closing 37 check-cashing and payday loan locations at Texas convenience stories. It said it will wind down those operations over the next six months, with CEO Rick Wessel noting that "regulatory and competitive pressures, especially in Texas," led to the decision to reduce exposure to payday loans. He said revenues from payday lending were expected to fall to less than 5 percent of revenue in 2014, compared to less than 7 percent in 2013. First Cash said it expected to earn between $3 and $3.15 a share in 2014, compared to analysts' consensus estimate of $3.38.

Earlier this month Fort Worth-based Cash America also said it was closing a number of Texas payday loan locations, citing city laws restricting their operations.

-- Jim Fuquay

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First Cash has experienced strong growth over the past several years as it has rapidly expanded its Mexican pawn lending business, growing stores nearly six-fold since 2004 to almost 600 today. Similarly, it has grown its US pawn lending business as well - almost doubling stores during the same time period. The light-speed growth of the Mexican business over this timeframe has allowed it to become the company's largest segment, representing 55% of revenue.
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