Cash America boosts 2Q profit guidance

[cashlenders]

FORT WORTH, Texas - Pawnshop operator and cash advance provider Cash America International Inc. boosted its second-quarter guidance Monday, as economic woes and turmoil in the lending industry sent more consumers to its pawn shops.


The news sent Cash America shares up $4.37, or 14 percent, to $36.47 in afternoon trading, after peaking at $36.90 earlier in the day. Over the past 52 weeks, the company's shares have traded between $26.17 and $48.86.
Cash America said it now expects to post a second-quarter profit of 62 cents to 64 cents per share, up from previous guidance of 51 cents to 54 cents per share.


On average, analysts polled by Thomson Financial expect a profit of 53 cents per share for the period.


Cash America said its pawn lending business benefited from higher-than-expected revenue from pawn loans and higher gross profit dollars on the sale of merchandise.


In addition, the company said its online cash advance product offering posted strong revenue growth and lower-than-expected loan losses.
Cash America also said Monday that it has not yet closed any of its locations in Ohio as a result of a new state law there that caps payday loan interest at 28 percent. The company said in May that the change in state law could force it to close up to 139 of its Ohio locations.


Payday loans are short-term, unsecured loans offered to cash-strapped consumers that typically mature in two weeks or on the borrower's next payday. The loans are often priced at a fixed-dollar fee, but the underlying annual interest rate is usually near 400 percent or more.


The company said that the new estimates do not include any charges related to discontinued operations in Ohio, but do include additional expenses for activities related to potential alternatives in that state.


The estimates also include costs related to the closure of 12 cash advance locations in California and Texas, the company said.


Cash America plans to release its second-quarter results before the market opens on July 24.