Late last week, payday lender and check-cashing giant Dollar Financial
Whether it's buying used-car dealerships or reaching borrowers online, the payday lending business is branching out into new areas, not only to grow, but to survive. As regulators in the U.S. clamp down on many industry practices, the more creative competitors will thrive. Dollar Financial has been using the right side of its brain, too, branching out beyond the U.S. and buying franchises north of the border. Earlier this year, it bought 13 franchises of its National Money Mart subsidiary, and last month it closed on 82 Canadian stores of its Dollar Financial Group subsidiary.
In foreign markets, Dollar Financial opened 19 new company stores: 10 in Canada and eight in the United Kingdom. Only one new store was opened the U.S. In addition to the Canadian acquisitions above, it also bought five more in the U.K., four of which were in Northern Ireland. Unburdened by the kinds of onerous legislation being dreamt up by legislators here, Dollar Financial saw revenue increase by 31% to $15 million, while international same-store sales grew by 23%. In comparison, U.S. comps had a 18% rate of growth.
In all, it was a strong performance from the company, in line with similar performances by EZ Corp
Dollar Financial has been increasingly insulating itself against the vagaries of the U.S. regulatory climate by growing its presence overseas. For the twelve months that ended in June, 42% of Dollar's revenue was derived from Canada and 23% from Europe. Moreover, payday lending, which is the focus of critics' ire, comprises only 10% of Dollar's revenue; the bulk of its sales come from check cashing.
Outside the U.S., the typical customer for its service is a different breed. Whereas as only 38% of U.S. customers have bank accounts, some 60% of the typical Canadian customers do and that number increases to 80% in the United Kingdom. Thus, where U.S. customers need Dollar's services because they are "under-banked," the vast majority of the company's international customers simply want their services, whether because of the convenience of Dollar's hundreds of branches, the extended store hours, or just poor service received at traditional financial institutions. Couple that with the less onerous regulatory environment, and it's easy to see why Dollar Financial wants to expand operations beyond the U.S.
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