By Jennifer Williams

LAS VEGAS — At a Max Pawn Luxury shop near the Las Vegas Strip, a glass case full of preowned Hermès Birkin bags catches the eye of a Texan looking to buy luxury goods. Across town at an Ezpawn store near the airport, local Nevadans need a $200 pawn loan to pay their bills.

Pawnshop operators like Ezcorp, which owns both the Max Pawn Luxury and Ezpawn chains, have long served as a bellwether for the cash-strapped consumer. But more recently, Ezcorp's business reflects what economists call the K-shaped economy, a picture of the American consumer on two different tracks as higher prices for everything from groceries to gas widen the economic divide.

"There definitely looks to be a greater need for cash now than a year ago," said Ezcorp finance chief Tim Jugmans. "You have people going, 'Well, I'm not qualifying for certain consumer loan products, maybe I'm better off just getting a pawn, and that allows me to deal with my finances.'"

And while some consumers are seeking cash, others feeling more comfortable financially are seeking out high-end goods at a bargain price, with Ezcorp's all-luxury locations attracting buyers from across state lines.

Cash-strapped consumer

Consumers continue to face stubbornly high prices for food, housing and gas. As expenses balloon, more Americans are turning to Ezcorp for value purchases and small-dollar loans that don't require credit checks and employment verification. For the three months ended March 31, Ezcorp's overall pawn loans surged 33% to a record high of $349 million from a year ago, with U.S. loans up 16%. The average loan size in the U.S. climbed 16% to $240.

Pawnshops thrive when budgets tighten, offering a venue for budget-conscious sellers to unload items and bargain hunters to find deals. Ezcorp, with more than 600 locations across the U.S. and its territory Puerto Rico, is no exception.

On a recent afternoon, the Ezpawn near the Las Vegas airport is packed with everything from musical instruments and bicycles to preowned Louis Vuitton bags and Nike sneakers. Customers filter in and out, many of them regulars who know the staff by name.

Shoppers browse electronics and jewelry. Others are already planning for Christmas and Valentine's Day gifts, using layaway programs that stretch up to 10 months to manage the cost.

"Our customers really use us as an alternative...to be smarter in what they're doing based on the economic conditions out there," said Jerry Jory, a division vice president at Ezcorp. The company's merchandise sales for the quarter ended in March climbed 27% from a year earlier to roughly $214 million.

They also stop in for a pawn loan. Pawnshops offer short-term cash loans against personal collateral like jewelry, electronics and musical instruments. Borrowers only need a valid form of identification to walk away with cash; there are no credit checks and nonpayment won't damage their credit score. If a customer doesn't repay, the shop sells the merchandise to recover the loan balance.

Recent budget pressures mean more people rely on pawn loans to bridge the gap between paychecks, according to Jory. "When times are tougher, people have to find a way to get an additional source of income," he said. "For some customers, if we weren't there, what would the option be, not drive?"

The loan growth at Ezcorp's stores is particularly notable for the start of the year, analysts say.

"In those three months, pawn loan demand is usually depressed, because that's when people start getting tax refunds," said Kyle Joseph, an analyst at financial services firm Stephens.

The safety net isn't free. Borrowers forfeit their collateral in 35% to 45% of transactions with Ezcorp's stores for not repaying the loan. Across pawn stores generally, those who do pay face costs that vary widely by location because of different regulations: Some states cap interest rates at 5% a month or below before any extra fees, while others permit up to 30%. In Nevada, pawnshops can charge monthly interest of up to 13%, plus a $5 initial fee and storage costs for certain items.

Ezcorp's revenue for the period through March climbed 46% from a year earlier to $447 million.

"Everything is expensive. That's driving good loan demand," said Joseph. "But you also have more bargain-hungry consumers looking for deals, and pawnshops have relatively good pricing."

The other customer

At the Max Pawn Luxury store close to the Strip, plush leather chairs, warm lighting and complimentary refreshments reflect a different economic reality. Roughly 20 preowned Birkin bags sit locked in a glass showcase lining one wall. Elsewhere, displays are stocked with secondhand Chanel handbags, Rolex watches and luxury footwear from Louis Vuitton and Gucci. Price tags surpass $30,000 for some used Birkins.

This all attracts a very different clientele. Shoppers journey from other states to buy luxury goods. Many rarely request layaway and seldom need a loan. While some save up for a single splurge, "a lot of customers own three, four, five Birkins or multiple Rolexes," said store manager Chris Jewell.

Ezcorp boosted its presence in the higher-end market in 2022 by acquiring luxe pawn operator Max Pawn Luxury. It remains a small but expanding slice of the business, with three stores in Las Vegas and a fourth that opened in Miami last year. Ezcorp doesn't disclose stand-alone financials for the luxury storefronts, and hasn't set a target for the number of stores, according to Jugmans, the CFO.

"Our main aim right now is to get them all humming," he said. "We're really just seeing how we can ensure that it's replicable in other cities."

Initially, the push came with growing consumer appetite for secondhand luxury. This prompted a companywide luxury rollout, with all standard stores carrying a curated, typically lower-priced, selection of high-end items. Now, as affluent shoppers continue to spend with confidence while lower-income consumers pull back, analysts say the all-luxury concepts capture the more resilient side of a divided economy.

"Everyone thinks of pawn as the lowest end of the credit spectrum, but I think they are sort of capitalizing on the K-shaped economy," said Stephens's Joseph.

Write to Jennifer Williams at jennifer.williams@wsj.com