H&T profits to be in line with expectations as pawnbroking sector improves
The company has continued the strategy set out last year to reduce debt, control costs and drive revenues. In a statement, H&T said its plan to reduce borrowings had gone well with net debt at 30 June 2014 standing at £13.5 million compared to £28.5 million at the same time last year. Operating costs also reduced year-on-year.
H&T said the strong retail performance seen in the second half of 2013 had continued into the first half of 2014 with retail sales rising by 49% on the same period last year.
The company said it also made good progress with the development of the Discount Secondhand Jewellery format with the conversion of 36 H&T Pawnbrokers stores to the new brand. The new format will continue to offer pawn broking loans while the increased focus on retail is expected to deliver a higher level of retail sales.
The pledge book at 30 June 2014 was £38.4 million compared to £48.6 million at the same time last year. The reduction, which was in line with management expectations, was mainly driven by the impact of competition, maintaining the loan to value ratio, and a reduction in aged pledge.
H&T said trading conditions in the pawnbroking sector are improving. The company added: “The factors that impacted pawnbroking in the last year are abating and notes that recent lending has stabilised and there are early indications of a reduction in competition. Accordingly, the board would expect only a small reduction in the pledge book in the coming half. The group has a number of initiatives underway to improve performance of this key area of the business going forward.”
H&T has closed four stores so far this year and opened one to give it a total of 191 trading units at 30 June 2014. The company is planning to close a small number of additional stores during the remainder of the year as it takes advantage of lease breaks.
H&T said: “The board continues to believe that the current number of stores in the sector is unsustainable and we expect to see further consolidation and rationalisation during 2014. The board believes that the group is well positioned to take advantage of this changing marketplace as and when opportunities arise.”
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