H&T hedging bets with retail sales of jewellery

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Latest trading statement says sales remain in line with expectations.

Pawnbroking group H&T has released a trading statement today stating its intention to optimise jewellery retail sales in the face of the lower gold price.

The group operates about 160 stores nationwide and 50 kiosk-style Gold Bars and has a current pledge book of £47.2m. It says trading continues to be in line with market expectations of full year profit before tax.

Referencing previous statements, H&T said it is facing lower returns in the short term as a result of the increased competitive environment and the reduced gold price. As a result it is now focusing on optimising its retail sales rather than expansion through new greenfield sites.

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"This has led to significantly increased retail sales, a reduction in net debt and the successful launch of ancillary products. The alternative credit industry as a whole also faces regulatory challenges and the [H&T] board believe that opportunities may arise to capitalise on these combined market pressure", the statement reads.

H&T says its retail operation has been a key focus during the second half of 2013, and that retail sales of jewellery have provided it with "a degree of hedging" against the lower gold price.

The businesses’ like-for-like sales were up 13% in August, increasing to 27% in September. H&T says this trend has continued during the month of October, and is a positive upswing following its H1 2013 like-for-like sales fall of 12%.

H&T said a measured approach to cost reductions is expected to result in the cost base for 2013 being lower than that reported in 2012 despite the increased estate size.

The group is also launching several initiatives to alleviate the risk to its balance sheet and reduce net debt by way of stock and aged pledge reductions. The pledge book currently stands at £47.2m.

At present H&T has £30.6m of retail stock which it has recorded on the balance sheet at the original pledge or purchase amount. Having identified all aged stock balances and an excess holding at the group’s central jewellery processing centre, H&T plans to reduce both after the Christmas trading period.
 

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