But pawnbroker plans ahead with focus on Asian gold market.
Albemarle & Bond has posted its interim financial results for the six months to December 31 2012, with profits before tax down 33% to £8.1 million, in line with expectations owing to reduced gold buying profits.
The pawnbroker’s gold buying margins remain solid however, sitting above 30% for the third consecutive year.
Albemarle’s pawnbroking profits totalled £17.6 million in the six months, up 2.3% on 2012’s figure of £17.2m. Albemarle & Bond ended the year with a pledge book of £38.1 million, down just slightly on 2012’s £38.3 million, owing to "the reduced volumes of gold in circulation and increased competition".
Albemarle & Bond’s retail jewellery and product sales were up 16.7% to £10.5 million, with profits up 32%, while its gold buying contributed £9 million compared with £12 million in the prior year period, due to the decline in volumes and percentage margins recorded since April 2012.
The company has continued its gold pop-up store initiative, running pop-ups across 43 locations in last year, with four store acquisitions in London completed out of the five that had been planned.
Barry Stevenson, chief executive of Albemarle & Bond, said: “Profits were in line with expectations as we experienced tougher and more competitive markets in the first six months of the year and we expect these market conditions to continue in the second half.
"The investment we made to more than double our store base is delivering positive returns and the majority of the new stores have contributed an operating profit in the first half with potential for future growth."
Albemarle & Bond is now set to exploit new opportunities and diversify its core pawnbroking offer into new customer segments and products, including Asian gold, precious stones and diamonds and non-hallmarked precious metals.
Stephenson added: "We are focused in the second half on implementing our strategy to increase our pawnbroking market share through new customer segments such as Asian gold and small business owners, targeted promotions and marketing to recruit new customers."
Following a review of the changing structure of its business, the market, its customers, and the competition, Albemarle & Bond has also updated its growth plan for the business.
It will drive future growth by building on its pawnbroking offer to provide a broader set of lending choices and cash services to its customer base. It will also diversify its pawnbroking business, reaching out to new customers by offering loans against a broader range of items including diamonds and other precious stones, non-hallmarked gold, hallmarked gold, and other precious metals.
Prestige watches are also set to become an increasing part of Albemarle’s portfolio in the coming year.
"We have been actively growing the amount of high carat gold in our pledge book and this will remain an important focus for gold-based pawnbroking. We have invested in state of the art technology that enables our staff to precisely evaluate customer’s jewellery for all of its precious metal content," said Stephenson.
Looking ahead, Albemarle & Bond says it expects the market to remain highly competitive in the second half of the year.
Stephenson said: "With our strong brand, extensive store portfolio and growing on line platform, the group is well positioned to serve the needs of the over 10 million cash and credit constrained consumers in the UK today.
"Our strategy will be focused on continuing to drive operational performance as well as diversifying our pawnbroking business, offering a broader set of lending and cash solutions and building our unsecured lending business."
At present Albemarle & Bond has 233 store locations in the UK.