Pawnbroker positive about shift from scrap sales with profit up 18%.
H&T Group has today issued a trading update prior to the announcement of its preliminary results for the year ended December 31 2013, reporting an 18% rise in gross profit in Q4, and like-for-like sales up 56%.
The UK-wide pawnbroker is due to release its full 2013 results on February 27 2014, with the board expecting full year profit before tax to be in line with current market expectations.
Today’s trading update described how the 29% reduction in gold price during 2013 had "a material impact on the business", with reduced earnings from both gold purchasing and pawnbroking scrap together with pressure on lending rates.
H&T’s pledge book reduced 14.5% to £44.1m as of December 31 2013, compared to 2012’s figure of £51.6m, said to be a result of the competitive environment and reduced lending rates.
However H&T says it has benefitted from its continued presence in the retail jewellery market and its switch in disposition from scrap sales to retail, which has produced good results with like-for-like sales in Q4 up 56% on prior year and gross profit up 18%.
The company is likely to close a small number of non-contributing stores in 2014 and at the same time says it will look to acquire profitable pawnbroking opportunities.
H&T says it has responded to the challenging trading environment by suspending its new store opening programme and focusing on driving retail sales to reduce the exposure to gold price on disposition.
Cost savings resulted in lower operating costs for H&T in 2013, despite the group’s larger footprint, and this reduction is expected to continue into 2014 due to the full year effect of measures implemented in H2 2013.
The pawnbroker added that its plans to "de-risk the balance sheet" by reducing borrowing progressed well in 2013, with net debt at year end being £20.8m compared to the £27.6m recorded in 2012.
The update also expressed that the group "would expect to see further improvements as the post-Christmas stock reductions take effect".