Pawnbroker profits rises as gold prices rise

21-08-2008

Pawnbroker profits rises as gold prices rise
Pawnbroker H&T Group has reported a 39 per cent profit rises as Brits turn to traditional means of raising cash.

H&T saw profits rise to £4.6 million – boosted by the increase in gold prices as the firm made £2.4 million in the first half of the year by melting down unclaimed and bought jewellery.

The company's pledge book – allowing people to borrow cash secured on pawned items – grew by 14 per cent and turnover at its stores rose 30.7 per cent on the first half of 2007.

However, N&T chief executive John Nichols maintained growth was not coming from the economic slowdown.

"Against wider perception, pawnbroking is not overall a cyclical business and the weaker economic climate is not necessarily a driver for our business," he said.

"This ongoing strong performance has been the result of a successful overall strategy based on sustained growth in the established estate, along with investment in new stores."

The firm's cheque cashing and payday loan services saw a 14.6 per cent rise in profits to £1.8 million.

So far this year, H&T has opened six new stores taking its UK network to 95 outlets.

Looking forward, the firm remains "cautious about the current and future high street trading conditions", despite its growth, and expects retail revenue could be hit. However, this would be offset by higher gold prices making scrapping of old jewellery more profitable.

The firm is also for the first time hedging some of its exposure to the gold price in order to protect its margins on melting down gold.

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