INTERVIEW: H&T boss on half year results


CEO John Nichols reveals his joy over soaring profits.

John Nichols had a smile on his face this morning when he received H&T Pawnbrokers’ half year results.

His joy is not surprising. Profits before tax (PBT) are up by 70.6 percent to £14.5 million on H1 2009, with gross profit increasing by 67.8 percent year on year. Net debt has been reduced by over a quarter to £30.2 million, from £42.3 million in December.

Story continues below

With the gold price remaining strong, almost a third of the group’s gross profit to June 30 was generated through the performance of the company’s Gold Bars and in store gold purchasing.

H&T chief executive John Nichols says: “We have had a good strong half of the year. What I am happiest about is the way our pawn broking business is growing and the pledge growth. I am also heartened by the retail sales coming into quarter two. We have been very surprised in the increase in like for likes we have been seeing over the summer in both gold and silver.”

H&T currently has 128 stores in operation, with six opening in half one and another four already in place for later this year.

Nichols intends to invest profits back into the business to fuel continuing expansion, in addition to writing off some of its debt and paying a dividend to shareholders.

Of H&T’s new stores, 51 percent have yet to reach maturity and 30 percent of its total sites are unlikely to produce profit in 2010. As gold purchasing begins to decline, Nichols therefore predicts lower profits in 2011. Part of this is due to his continuing uncertainty over where the gold price will be in a year’s time.

“I think gold purchasing continues beyond where we thought it would be,” he says. “I can tell you exactly where the pawn broking business is going to be and I possess a good degree of certainty over retail, but we really don’t know with gold purchasing. Going into next year, we really have to discount gold purchasing to a degree because of a lack of certainty over its longevity.”

H&T monitors the performance of its Gold Bars on a weekly basis
and will frequently close one down or move it elsewhere. While the business in gold purchasing is not as strong as it has been previously, Nichols attributes this largely to an increase in competition.

Nichols says: “Since the beginning of the year, we have closed twenty and opened others. We constantly monitor them on a weekly basis, but there is now a huge amount more of competition.

“I am not sure whether gold purchasing will decline over the next year . Had I seen the decline at the beginning of the year continue, I would have said ‘yes,’ but it has been improving in the last few weeks.”

The Group had 56 Gold Bar retail mall units in operation as of June 30 2010 and, on the basis of the current gold price, Nichols believes that the full year results are likely to be above the top end of market expectations.

Tags : H&TH1 resultsJewelleryJohn NicholspawnpawnbrokerProfessional Jewellerprofits
Staff Writer

The author Staff Writer

Leave a Response