Pawnbroker H&T surges as Mothercare becomes the latest big name to struggle over Christmas

The relatively upbeat opening to the current retail reporting season provided by Next is rapidly receding in the rear view mirror

Mothercare is the latest high street retailer to report a grim Christmas (PA)

As the high street sinks into a pit the pawnbrokers are making merry. There could be a metaphor for Theresa May’s Britain there.

Mothercare’s brutal profit warning this morning follows hot on the heels of Debenhams’ at the end of last week.

The confirmation that House of Fraser, like Debs a department store chain, has been writing to landlords asking for rent reductions highlighted that the Chinese owned group is also struggling.

The relatively upbeat opening to the current retail reporting season provided by Next is rapidly receding in the rear view mirror.

Pawn broker H&T, by contrast, is in clover, telling its investors that its numbers will exceed their expectations with the reverse of a profit warning.

Its traditional pledge book increased by 11.6 per cent, thanks in part to the high gold price and an increase in lending against fancy watches. Its personal loan book nearly doubled in size, driven by the introduction of a longer term, lower interest rate offering.

H&T is a smart, savvy operation, that weathered the storm suffered by the industry in 2012 and has made smart use of new technology to enhance its offer. It can also offer better value than payday lenders do to customers.

But let’s be clear here: if you have alternative sources of credit available to you you’re not going to go to a pawn broker. H&T’s business still centres on advancing pricey short term loans to people who find themselves in a jam.

With wages continuing to undershoot inflation, and the pips squeaking with the economic tidal wave of Brexit only now beginning to crash onto the shores of this island, the numbers of people in that position are rising. As such, H&T ought to be set fair for the future.

Not so traditional retailers. The outlook for them is grim and getting grimmer.

The issues faced by the chains mentioned above are not solely down to a bad economy, the “challenging conditions” created when you throw in the impact of online competition, and the machinations and mismanagement of a rotten government. They just serve to make the mountain they have to climb that much steeper.

What is notable about the two profit warnings is how they show that you’re damned if you do and damned if you don't when it comes to discounting right now.

Mothercare suffered through trying to hold the line on price, incurring a 7 per cent fall in like for like sales as a result. There won’t be much in the way of profit.

Debenhams tried the opposite approach, discounting aggressively in the run up to Christmas only to see sales taking a tumble afterwards. Its bottom line will be a little rosier than Mothercare’s but that isn’t saying much.

Can either of them find an answer to the conundrums they face? Is that even possible?

They’ve both of them cut costs, and neither is yet in the position where they’ll need to find a pawn broker to get them out of the tight spot that they find themselves in.

But the trading environment they face isn’t going to cheer up anytime soon and they don’t have forever to find answers.