Jewellery sales boost H&T

A surge in demand for second hand jewellery over Christmas helped Britain's biggest pawnbroker weather crashing gold prices as high street sales leapt higher.

A surge in demand for second hand jewellery over Christmas helped Britain's biggest pawnbroker weather crashing gold prices as high street sales leapt higher.

H&T Group said it saw buoyant trade over the festive quarter, with like-for-like sales rising 56% across its 194 stores in the last three months of the year, with gross profits up 18%.

This compares with a 12% drop in retail sales in the previous six months.

H&T confirmed annual profits were in line with market expectations after the retail sales boost, despite suffering a "material" hit from a 29% plunge in the price of gold over 2013.

Its closest rival Albemarle & Bond has been forced to put itself up for sale after dire trading caused by the slump in prices and rising competition in a sector that has more than doubled in size over the past five years.

Albemarle has been trading at a loss in recent months and is in danger of breaching financial covenants while it looks to secure its future before the end of a three-month reprieve from its lenders at the start of February.

H&T is one of a number of trade and financial buyers that have formally lodged interest in buying Albemarle.

It declined to comment further on the bid process, saying only that it will "look to acquire profitable pawnbroking opportunities" over 2014.

"The current challenging market will accelerate the industry consolidation and rationalisation that we believe is necessary in the short term," added the group.

But H&T has not been immune from the gold price woes, which saw it shut down its 55-strong Gold Bar chain at the end of the summer after group-wide half-year profits slumped 39% to £14.8 million.

It also plans to close a further five loss-making stores from its main estate over the year ahead.

H&T revealed its pledge book fell 14.5% to £44.1 million in the latest quarter due to increased competition and lending rates.

Chief executive John Nichols said strong jewellery sales were offsetting some of the gold price gloom as it focused on selling items rather than smelting them down.

"There are some green shoots on the high street," he said.

"There's also good value in second hand jewellery and people are beginning to understand that," he added.

Jewellery sold in its stores largely comprises pawned items that have not been reclaimed, although it also buys in a small amount of second hand stock to sell.

Demand was strong across the board over Christmas, including some high-value pieces sold for around £15,000 to £20,000, the group said.

Shares lifted 6% after the update, with analysts at Numis Securities saying the figures were "reassuring, despite the backdrop".