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Shortage of Scrap Gold in UK Market Hits Pawnbrokers
The UK’s biggest pawnbroker has said competition had squeezed its gold purchasing arm but this had been offset by demand for higher loans in its core business.
H&T Group, which has 174 stores and 55 “GoldBar” units, said its pawnbroking operations were expected to report double-digit year-on-year growth in the six months to June 30, boosted by an increased size of the average loan and a bigger pledge book.
But its gold arm, which enjoyed strong growth last year, appears to have come off the boil as less was purchased and the value of the precious metal has also fallen.
The update comes after rival Albemarle & Bond warned its profits for the whole year would be lower than expected due reduced gold buying activity and the possible impact of wet weather.
The value of gold is about 16% lower than its peak last September at around 1599 US dollars an ounce.
The price of gold soared throughout most of 2011 as its safe haven status, amid increased global recession fears, caused investors to plough into the precious metal. The growth slowed although there has been a pick up in recent weeks as the eurozone crisis escalates.
However, the softer market has not stopped H&T’s expansion plans as the group converted two GoldBar units into fully-fitted stores, and opened a further 14 outlets in the period.
The group said year to date retail sales are up 7% reflecting new store additions, but down 11% on a like-for-like basis due to the tough retail climate.
Shares were broadly flat after the update