Albemarle & Bond loses lustre as gold trade falls

Albemarle & Bond has slashed its store opening programme after a sudden slowdown in consumers exchanging gold for cash and stagnating prices of the precious metal.

The comments by the pawnbroker sent shares in Albemarle & Bond tumbling 12 per cent yesterday, although the 234-store operator managed to scrape a rise in full-year profits.

The group has stormed through the consumer downturn by reinvesting its profit growth in rapid store expansion, including dedicated cash-for-gold shops, but lower gold prices have hit its momentum.

Albemarle & Bond will introduce just five new outlets this financial year after opening 25 in 2011-12.

Its chief executive, Barry Stevenson, who is a former Marks & Spencer director, said: "The expected downturn in the gold-buying market happened very quickly and has set a new level to which we have quickly adapted.

"We expect gold-buying to continue to be a significant profit contributor to the group albeit at much reduced levels to that achieved at the peak."

His comments were not entirely a surprise as the company warned on profits in June, and rival pawnbroker H&T followed suit in August. But shares in Albemarle & Bond tanked by 36p to 260.5p yesterday.

The group said its gross profits from gold-buying tumbled from 87 per cent in the first half to just 18 per cent in the final six months of the year. Its pre-tax profits rose by just £362,000 to £21.4m over the year to 30 June.

Albemarle & Bond, which was founded in 1983 from a single shop in Bristol, said the price of gold had remained "broadly stable" over the last 12 months but this compared to compound growth of more than 20 per cent over the previous three years.

However, its core pawnbroking business remained buoyant and grew revenues by 10 per cent to £34.8m over the year, boosted by new stores.

Albemarle & Bond also said it had acquired Early Pay Day Loans, an online operator, for £1.2m.