Can Cash Converters Sustain Growth Amid Lending Shifts and Store Acquisitions?

Strong Financial Performance Amid Strategic Transformation

Cash Converters International Limited (ASX, CCV) has delivered a solid FY25 financial performance, underscoring the effectiveness of its ongoing strategic transformation. The company reported a 20% increase in operating net profit after tax (NPAT) to $25.1 million, alongside a modest revenue rise to $385.3 million. This growth is underpinned by a diversified business model that blends lending with repurposed retail, supported by a global network of 659 stores across 15 countries.

Key to this success has been the company’s focus on evolving its lending products away from higher-risk payday and vehicle loans towards longer-term, lower-cost options. The introduction of the new ‘Cashies Loan’ product in Q2 FY26 is expected to further scale this shift, aiming to reduce loss rates and improve credit quality. Indeed, the net loss rate has already declined to 16.0%, down from 17.5% the previous year.

Expanding Store Network and Luxury Retail Focus

Cash Converters is aggressively growing its store footprint through franchise acquisitions, particularly in Australia and the UK/Europe. Since FY21, it has acquired 96 franchise stores, with plans to add 20 or more annually. This expansion is complemented by the rollout of smaller, metro-based luxury-only stores, a segment that has demonstrated strong margins and sales performance, exemplified by the success of the Bondi store format.

The luxury retail segment leverages AI-driven authentication technology to ensure product quality, enhancing customer trust and supporting higher-margin sales. This strategic pivot not only diversifies revenue streams but also aligns with the company’s commitment to the circular economy, having repurposed over 1.7 million items in Australia alone during FY25.

Financial Strength and Shareholder Returns

Cash Converters maintains a robust balance sheet with $73.2 million in cash and equivalents and an undrawn securitisation facility of $81 million. The company has secured funding through a £12 million facility with Lloyds Bank in the UK and is exploring additional lower-cost funding options in Australia to support growth initiatives.

Shareholders continue to benefit from consistent returns, with five consecutive years of fully franked dividends. The FY25 annual dividend of 2.0 cents per share delivers a healthy yield of 7.1%, reflecting the company’s focus on sustainable cash NPAT growth and dividend momentum.

Looking Ahead, Scaling Growth and Innovation

Looking forward, Cash Converters aims to maintain its earnings momentum by scaling new loan products, expanding its franchise store network, and deepening its presence in the luxury retail space. The company’s data-driven approach, including proprietary machine learning credit models and AI authentication, positions it well to navigate evolving consumer credit demands and retail trends.

As the company continues to simplify its business model and focus on longer-term, responsible lending, investors will be watching closely to see how these initiatives translate into sustained profitability and market share gains in FY26 and beyond.