Strong 2012 at H&T despite softening cash for gold

Group to open more stores, ramp up staff training and trial new tech.

H&T Group continued to excel in the pawnbroking sector in 2012 with an impressive set of full-year results and fresh plans to increase focus on new business areas as the cash for gold boom quietens.

During 2012 H&T became the first pawnbroker to have a pledgebook that exceeded more than £50 million, a net debt to EBITDA ratio of 1.3x and retail sales inched up 1% to £20.1 million. Reflecting this, the group successfully refinanced its debt facilities in January, securing a further £50 million four year facility with Lloyds TSB.

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Year-on-year profits before tax did, however, slip 4.8% to £62.3 million, although this was in line with expectations, caused by "competitive pressure on gold purchasing" and the costs of its expansion programme, which in 2012 yielded 26 new stores.

H&T said that it will continue its store expansion programme in 2013, and has already opened six stores, but that the rate of openings will slow. H&T chief executive John Nicholls told Professional Jeweller that the group will "revert to more of a mixture of acquisitions and greenfield sites".

Nicholls said that competition in the cash-for-gold market has lessened with many of the postal gold services dropping out of the market as the price of gold has passed it peak. Nicholls described the cash-for-gold boom as a "short-term opportunity rather than a core earnings stream" and as such the company is looking into alternative revenue streams and as such is overhauling its retail offer.

H&T said that the jewellery retail environment remained "difficult" in 2012, mainly due to the rising price of gold impacting on customer affordability – at H&T the average retail price of 9ct gold jewellery jumped 13% year on year, although the group said that its pricing remains competitive.

Total retail like-for-likes were down 14% year on year. Gross profit from retail was £9.9 million, up slightly from £9.8 million in 2011, with a flat margin year on year.

In the second half of 2012 H&T implemented a stock overhaul, and Nicholls said that the company has improved its logistic supply chain and as a result has managed to reduce its stock holding. He said: "Before it was taking a little longer to get the right stock to the right store, now we can do it within in the working week."

H&T has also been investing in staff training with Nichols claiming that the company undertakes "more training than anybody in the industry". A particular focus for the group in 2012 – and something that will continue in 2013 – is a focus on gemset jewellery. H&T is currently trialling new technology in 12 of its stores that allows shop staff to place a piece of jewellery under a high tech web cam, which is linked to a gem expert who can offer pricing advice.

Nicholls said: "We can put that particualr piece of jewellery under a advanced web cam and can ask FGA [Fellow member of The Gemmological Association of Great Britain] advice. We’re joining the 21st century, it’s exciting."

If this technology trial is a success there is the potential to roll it out to more H&T stores, said Nicholls.

 

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