Cash-for-gold growth slows at Albermarle & Bond

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Too early to determine if this is a trend or fluke, says pawnbroker.

The cash-for-gold business at pawnbroking chain Albermarle & Bond has shown signs of slowing down in the past two months.

In a trading update the retailer said that while its cash-for-gold business is still continuing to show exponential growth, the trajectory has flattened out some with the percentage year-on-year growth in value of gold bought slowing from more than 50% in the first half of the year to middle single digits in the past eight weeks.

The pawnbroking chain said that it is “too early to tell” whether this decline in its stores buying in gold is a general trend or whether figures have been dampened by the recent wet weather.

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Albermarle & Bond said that the slowing of this growth has had an immediate impact on both volumes on margins. It added that the lower prevailing sterling gold price was also a factor.

Revenues in this sector of the business have still shown growth but the group said that it has been “at a level below our expectations particularly given strong trading up to the end of March”.

Albermarle & Bond is still on track to deliver increased full-year profits but said that the final figures will be “below market consensus”. It added: “The company has consistently taken a flexible, asset light approach to gold buying and is monitoring developments closely and taking appropriate mitigating action. Effective management controls have already been implemented to reduce the growth across the group’s cost base.”

The company said that all otherdivisions within the company have been trading broadly in line with trends reported in its H1 results. In the final quarter of its financial year Albermarle & Bond said that the retail division has improved and the growth of its Speedloan unsecured lending service has slowed.

Albermarle & Bond chief executive Barry Stevenson commented: “Whilst the very recent trends in gold buying are disappointing we are very focussed on driving income growth out of our expanded store base and exercising rigorous cost controls.

“The group is well positioned to respond to changing market dynamics and satisfy the fundamental demand for short-term cash and credit from a potential 10 million UK consumers. The company expects to report final results in September and we look forward to providing a further update on strategy at that stage.”

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