Advance America shares fall as it closes 122 centers

July 9 (BestGrowthStock) – Shares of Advance America Cash Advance
Centers Inc (AEA.N: ) fell about 6 percent Friday, a day after
the payday lender said it will close its 122 centers in
Arizona, Washington and Colorado, and incur related costs.

The company said existing law permitting cash advances in
Arizona, where it will close 47 centers, expired on June 30 and
it concluded that an economically viable alternative product or
service does not currently exist.

It would also close about 75 other centers, including 55 in
Washington and Colorado.

The company expects to incur termination costs related to
the closures of $2.8 million to $5 million.

Spartanburg, South Carolina-based Advance America said
Arizona operations’ gross profit was $1.5 million on revenue of
about $3.7 million for the first quarter.

Advance America expects to incur about $1 million of
termination costs in the second quarter, and the rest in the
following two quarters of 2010.

The company’s first-quarter profit (Read more your timing to make a profit.) missed analysts’
estimates due to recent regulatory changes that hurt its
operations in Virginia, Washington and South Carolina.

Several states have now passed regulations capping interest
rates that can be charged on cash advance loans, narrowing the
profit margins of payday lenders and sometimes making them
unprofitable.

Shares of the company were down 5 percent at $3.64 in
morning trade on the New York Stock Exchange. They had touched
a 52-week low of $3.55 on Wednesday.
(Reporting by Abhinav Sharma in Bangalore; Editing by
Gopakumar Warrier)

Advance America shares fall as it closes 122 centers