Cash Converters
Cash Converters (ASX:CCV) commenced business with the opening of the first retail outlet in Perth, Western Australia in 1984. The core business of Cash Converters is that of the franchising of retail stores, which operate as retailers of second hand goods. Cash Converters has brought a high degree of professionalism and visibility to its industry. As a result, Cash Converters has been able to position its franchised outlets as alternative retail merchandise stores and, in the process, created a profitable market for the group.
Cash Converters now has over 100 outlets throughout Australia. The success of its Australian operations resulted in Cash Converters seeking to expand into overseas markets. The Company's carefully planned entry into Europe was launched in 1991 when the first store in the United Kingdom was opened at Gants Hill in Essex. Since then further stores have opened in the UK taking the total to over 100 stores. Since launching the concept in 1984 Cash Converters has grown enormously with representation in 21 countries worldwide and to a network of close to 500 franchised stores.
Cash Converters still converting despite current economic climate
The Company owned store strategy has gained momentum with the acquisition this year of six franchised stores and one new store opening in the UK. The acquisition of eight stores in Victoria, plus the opening of the first corporate store in NSW, takes corporate store numbers to 22. As a result the corporate store network has seen revenues grow by 380.4% to $19,586,047.
Opening new company stores in the UK and Australia, as well as further acquisitions of franchised stores in 2009, contribution from the corporate store division is set to grow rapidly.
The acquisition of franchised stores is a real opportunity to transform the Group into a significant store operating entity. Operating revenue for the 2007/08 period was $74,405,882 (2007: $45,979,982).
Increases in revenue were due to:
• Increase in financial services commission of $5,731,169
• Increase in personal loan interest and establishment fees of $6,254,810
• Increase in corporate store revenue of $15,509,285
• Increase in retail wholesale sales of $1,240,223
Australian and International Franchise Division
As has been the case historically, the Australian network has been a significant contributor with the business contributing an operating profit before tax of $2,510,082 up 2.8% on the previous year. Store numbers grew by 3 to 134.
Cash Converters UK Division
The UK business has continued the improved performance shown in recent years and contributed a profit before tax of $859,932 up 94.5% on the previous year. Store numbers grew by 6 to 130. Corporate store network in the UK expanded to 16 stores following the acquisition of three stores in Liverpool on 22 September 2008. The UK cheque cashing business contributed $1,145,638 for the year.
Online Sales
The Cash Converters Brand is being promoted with an online presence that has now been established in the UK and Australia. UK sales levels have exceeded $1 million since the launch of the site and fifty stores now trade regularly on the site encouraged by growing sales and consumer confidence in the reliability of the brand online. Some stores now attribute 30% of weekly sales to online sales and this is expected to grow through the next year.
Outlook for 2009
The company is confident an accelerated store acquisition programme can be achieved. The Company will now embark upon an aggressive growth strategy that will include a corporate store rollout program in the UK and Australia, combining the opening of new stores with the acquisition of franchised stores. As previously advised the company's profit guidance for the full year to June 2009 is $12.0 million. This includes no revenue from the IT solution currently being trialled in Queensland.
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