RE: RE: RE: RE: Kevin Paetz You make some very good points insightfultruth. Barret has been “moved on” to avoid the fire that is slowly engulfing The Cash Store, however, from what I understand, the woefully inadequate business model is catching up with The Cash Store in the UK as well. Unfortunately the junior Reykdal has never had any real business experience beyond The Cash Store and has been promoted for obvious reason so he lacks the genuine experience that would help him recognize what is wrong and make it right (assuming he had the authority).
The “right now” mentality that you rightly point has, in my opinion, has overwhelmingly been driven by the too long serving CEO’s flawed belief that he can drive the business from the back end. That is, providing loans to any individual who has a heart beat with the expectation that they will, after the customer has defaulted, collect not only the principal and fees, but MORE fees due to late charges. In essence the company is setting customers up to fail by allowing them to borrow more than they could hope to repay. It is no wonder that as you suggest there is no “value add”; how could there be with that as the cornerstone of your business model? Unfortunately the entire business model is further predicated on continuous growth. Look at the media releases; its all about how many new stores they open up, loan volume or being the fastest growing company in the nation; undisciplined growth is a dangerous thing. In my opinion The Cash Store is a Ponzi scheme in every sense of the word; they open new stores and generate new revenue to pay for the massive delinquency they have been building up over the years. Now with the growth slowing in terms of store opening (including closures) they can’t sustain the model. Make no mistake about it, the so called “lenders” are supported by a 20% return guaranteed by The Cash Store (ultimately the shareholders pay). It is reported that Mr. Reykdal had back rooms full of repossessed equipment and furniture that should have been written off during his tenure at RTO. Now he has applied the same principles, but instead, its the bad debt that should have been written off a long time ago. According to The Cash Store it appears that accounting “oversights” are now to blame for the $41 million hole they now face and a class action lawsuit to boot. Like I said, shareholders are ultimately paying. And lets not forget, Reykdal sold over $10 million of his shares in 2005 just before the stock tanked and has reaped the benefits of dividends since 2008.