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Rapid Pawn Shop System11/1/2021
He began with an old DOS system but with the rapid store expansions, he quickly outgrew it and desperately needed a scalable solution. The company also owns a large interest in Albemarie and Bond Holdings, a pawnshop operator in the United Kingdom.When Saul took over the business, the operations were outdated and with the burgeoning software technology in the pawn industry, he saw an opportunity to upgrade the business. EZPAWN stores are located primarily in the south, including Texas, where the company owns nearly 200 stores, as well as Colorado, Oklahoma, and Indiana. EZPAWN stores accept pre-owned goods, such as, jewelry, sporting goods, and consumer electronics, in lieu of loan redemption and then sells those goods at approximately 70 percent of retail value. The stores provide loans to customers who present property of value as collateral. Is the second largest pawnshop company in the country.Logue located these stores near large grocery stores in lower-middle income communities rather than in impoverished neighborhoods, as was typical of the time. The first EZPAWN was indeed a success, and eventually Logue was overseeing a chain over the next 15 years he would open one new store a year. The store turned a good profit and required little effort, and Logue decided that, with hard work, he could be even more successful in the pawn business. Employed as an accountant, Logue was inspired by the success of his father's friend, who operated a pawn shop in Dallas. Logue, Jr., opened his first pawn shop in Austin, Texas, in 1974.
![]() Rapid Pawn Shop System Upgrade The Business![]() Because pawn loans were based on 20 to 65 percent of estimated resale value of the property, EZPAWN sold the goods at below market value. The stores' merchandise consisted primarily of jewelry, at 50 percent of retail sales, as well as consumer electronics, tools, musical instruments, and firearms. The retail business, the sale of goods forfeited in lieu of loan repayment, accounted for 54 percent of total revenues and 24 percent of net revenues (total revenues less cost of goods sold). ![]() Moreover, the company expanded outside Texas for the first time, with six stores in Oklahoma 11 stores in Mississippi two each in Colorado, Alabama, and Tennessee and one in Arkansas. During 1992 EZCORP opened 25 pawnshops and acquired another 45 existing shops, bringing the total number to 127 stores. A secondary offering of stock in March 1992, at $16.50 per share, raised an additional $26.4 million.With renewed capital, the company began a vigorous expansion program. With 66 stores in operation, the company planned to open or purchase 40 additional stores in 1992 and 50 stores in 1993, expanding in existing markets or into adjacent markets. Total revenue and net income more than doubled again, to $108.6 million and $6.1 million, respectively.By 1993 the company's financial performance was strong, given the maturity of its stores as well as the greater number of them. The company added 30 stores in Texas, three in Oklahoma, eight in Colorado, nine in Alabama and five in Tennessee EZPAWN entered the pawnshop market in Georgia with four stores in the Atlanta area. Strategies for growth at store level included improved profitability through cost controls, attracting new customers, and focus on the retail business, adding a line of new jewelry to its pre-owned merchandise.EZCORP continued its fast pace of growth the following year, increasing its outlets by 25 new units and 34 acquired units, for a company wide total of 186 units. Store expansion more than doubled revenues and net income. The company entered the Indiana market for the first time with nine stores. The company prepared to build on its successful retail sales with advertising and promotion of its new and pre-owned jewelry.Mid-1990s: Management Changes and Financial ChallengesThe company continued to grow at a fast pace in late 1993 and in 1994, establishing 48 new stores and acquiring six stores. In November 1993, EZCORP centralized jewelry cleaning and refurbishment at a new 8,100 square foot processing center. The company reduced the prices on old inventory and sold slow-moving gold and silver jewelry as scrap metal to clear out retail display space for higher profit goods. EZCORP attributed improvements to same store sales growth, the addition of new jewelry, and fewer wholesale purchases. Retail sales also improved with gross profit margins at 25 percent in 1993 and a 131 percent increase in revenues to $63.8 million. Ark beacon modsLogue's new jewelry program proved to be the biggest problem, resulting in a $5 million loss in fiscal 1991 alone. Also, EZCORP reworked its method of estimating the accrual of pawn service charges, on a loan-by-loan basis, resulting in lower estimates. Despite, or perhaps because of, such rapid growth, net income fell due to several charges, including management recruitment and relocation, inventory markdown and clearance pricing, and inventory evaluation. Nevertheless, the company opened three new stores in Louisiana (two in New Orleans) and one store in Florida, entering those markets for the first time, and added five stores in Colorado, 12 in Indiana (primarily in the Indianapolis area), and one in Alabama. EZCORP closed six stores in Texas, one in Oklahoma, two in Mississippi, and two in Georgia. EZCORP used computer technology to facilitate management, with a new point-of-sale computer system and management information systems that allowed regional and central managers to obtain real-time data from individual store systems.While Fortune magazine named EZCORP one of America's Fastest-Growing Companies for 1995, the pace of EZCORP's growth slowed as it closed or consolidated unprofitable stores. He also decentralized certain controls and decision-making responsibilities to the store level, while store managers reported to regional managers. Lambiase created three executive-level positions: chief financial officer, vice-president of operations, and vice-president of marketing and merchandising. The latter was achieved by instituting management incentive programs to improve lending practices, loan redemption rates, and inventory turnover at an acceptable rate of cash return. To immediately address its problems, EZCORP moved to scrap its jewelry program and refine its lending practices. EZCORP's stock value dropped from $28 in 1993 to approximately $4 in 1995, as net losses of $15.8 million were reported. Investment for newly established stores averaged $450,000 each for the first year, for inventory, pawn loans, property, and equipment, and $250,000 for each acquired store.Still, such impressive growth belied financial problems, and eventually the company's struggles became public knowledge. Each store operated with a store manager, an assistant manager, and three to four sales representatives. At the end 1995 the company closed an additional 18 stores. A new inventory reserve methodology refined merchandise valuation, more closely matching the loan amounts to potential sale prices and profit margins.EZCORP continued to open new stores but also closed stores that did not meet certain performance standards.
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