Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Burtzlaff - Stephens, Inc.
David Burtzlaff - Stephens, Inc
Few questions, in relation to your original expectations and in your original guidance for the third quarter, can you breakout where the shortfalls were on the three revenue launch for your revised guidance?
Dan Tonissen
Yes, primarily in the signature loan fees, the pawn service charges and merchandise sales.
David Burtzlaff - Stephens, Inc
You do not have like; I mean what contributed more to that?
Dan Tonissen
The largest would be the fees on the two loan products.
David Burtzlaff - Stephens, Inc
Okay.
Joe Rotunda
And David, the issue was the ramp up of our portfolios. When we come up with the March season, the income tax, the refund season, the season when the customers are really flushed with cash, the rate of increase in our portfolios in the quarter, we expect it to be sharper because of the impact of the stimulus checks last year that we felt slower down somewhat during that period. But this year, we anticipated a sharper ramp up at a more historic level than last year’s and it did not come in that strong.
David Burtzlaff - Stephens, Inc
Okay, And then the merchandise margins were seen a little weak, is that mainly due to the value?
Joe Rotunda
On the merchandise margin?
David Burtzlaff - Stephens, Inc
Yes, the gross margin.
Joe Rotunda
It is about two point’s difference in cost of goods there that affects it. But the other factor was just on a same store basis, if you look at EZPAWN, we were down about three points in margin than last year. Last year was a higher margin than normal, we were 42% during this quarter a year ago in the EZPAWN and I think the stimulus checks at that point helped us because sales were very strong during the quarter and they seem to come a little bit easier, allowed us to or not have to negotiate at the point of sale to the same degree that we do this year where the market is much more difficult.
David Burtzlaff - Stephens, Inc
Okay.
Joe Rotunda
But even at 39%, it is within about a point of our traditional margin level, which is right up 40%.
David Burtzlaff - Stephens, Inc
Okay. Did loan balances pick up any relative to your expectations after you preannounced it all? I mean did you see any pick up late in June?
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