First Cash Financial Services Inc. said Tuesday its profit slipped 25 percent in the second quarter, narrowly beating analysts' estimates, as challenges in the pawnshop operator's car dealership business continued to weigh on results.
For the period ended June 30, the company reported income of $6.7 million, or 23 cents per share, compared with $8.9 million, or 27 cents per share, in the year-ago period.
Revenue rose 17 percent to $105.9 million from $90.6 million in the second quarter of last year. Revenue was boosted by sales at the company's Mexico operations, which increased 47 percent to $34.3 million.
The results were better than analysts' average estimates for profit of 22 cents per share on sales of $102.2 milion, according to a Thomson Financial poll.
Same-store sales increased 19 percent during the quarter. Same-store sales is a key retail metric that measures sales in stores open at least a year.
The company's car dealership business, Auto Master, incurred a store-level loss of 3 cents per share. Revenue for the division was essentially flat with the prior-year quarter's results, at $26.4 million.
First Cash Financial said actions have been taken that should reduce store-level losses to 1 cent per share or break-even in the third quarter, and that the segment should be profitable again during the fourth quarter.
The division has struggled with customers missing payments on their loans, and as a result has focused on implementing more rigid underwriting standards, requiring larger down payments from certain customers and selling higher quality cars.
Total expenses increased 18 percent to $41.1 million.
First Cash Financial operates 495 stores in 13 states and Mexico.
Shares fell 15 cents to $18.35 in morning trading.
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