H&T profits from growing pawnbroking popularity

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Company to add 50 new stores over two year period as gold sales soar.

Britain’s largest pawnbroker, H&T Group, has enjoyed another solid year with underlying profits increasing by 5.8% to £45.4 million from revenue of £125,516.

The company opened 25 new stores in 2011, and is on track to open an additional 25 this year, according to John Nichols, chief executive of H&T Group.

In an ongoing era of squeezed household incomes, the pawnbroking business experienced record levels of lending in 2011, driven by an increase in the average size of loans, as well as business from the additional stores.

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Retail sales of unclaimed items grew significantly, Nichols revealed to Professional Jeweller, thanks to ongoing investment to make the group’s 160 stores more attractive to customers buying gold jewellery and high end watches.

As traditional jewellers reduce their reliance on selling new gold jewellery because of the soaring price, H&T is picking up business for pre-owned gold. “We are becoming one of the main retailers of gold jewellery on the high street,” Nichols suggested.

Looking to the remainder of 2012, Nichols believes that the pawnbroking side of the business will remain steady, but retail sales could provide considerable growth. As well as new stores and improved store design, H&T has also invested in training its staff. “We expect customer service in our stores to be better than they would enjoy in a jeweller,” Nichols said.

The falling gold price has put pressure on profits, Nichols admitted, but says that there is still plenty of margin between what it values gold at for borrowers and what it sells for at retail. “Our improving retail performance is an important hedge,” he added.

The group believes there remains considerable potential for growth. Only a very small percentage of the UK population has ever used a pawnbroker, Nichols observed. “In the United States, twice as many people, relative to the overall population, have used a pawnbroker, so there is plenty of room to expand,” he concluded.

 

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