Pawnbroker H&T is turning its attentions to expansion, and has struggling rival Albemarle & Bond in its sights.
The company said it “will look to acquire profitable pawnbroking opportunities”, with chief financial officer Steve Fenerty refusing to rule out looking at snapping up some of Albemarle’s better-performing sites.
Fenerty added: “We are looking at expansion in several areas, and we strengthen our position by moving into strategic positions where we are only lightly represented.”
Albmarle’s profits have tanked and the business nearly collapsed after it failed raise enough funds from its biggest shareholder — a rival US pawnbroker EZCorp — to avoid breaching banking covenants. Instead, it has been on a major cost-cutting exercise, shutting nearly all its pop-up cash-for-gold shops, ending new payday loans and even melting down its gold reserves to generate some more cash.
Bosses last month put the business up for sale, with EZCorp said to be interested, after all Albemarle’s non-executives resigned, including representatives from the US business.
Better Capital was revealed as one suitor, but within a fortnight of being outed, the company withdrew its interest. H&T has managed to avoid similar problems despite suffering from the same fall in gold prices — down 29 per cent over the year — and said profits will be in line with expectations.
Fenerty said: “We’ve had less debt [than Albemarle] and structured the business in a way that if gold prices fell we’d be able to rely on other parts of the business.
“We’ve always said gold prices would continue to rise at the same pace. While the gold price going up was brilliant, it was never going to go up forever.”
Its lending business has seen the pledge book reduced by 14.5 per cent to £44.1 million as lending rates fall but sales in the retail jewellery business was up 56 per cent on last year.
The pawnbroking and payday loans industry boomed in the recession, especially cash-for-gold sites. But many have suffered with the gold price falling. Companies will soon start being regulated by the Financial Conduct Authority instead of the Office of Fair Trading, something Fenerty welcomed.
He said: “The FCA would say they were a more active body than the OFT. We will have a supervisor who we will liaise with directly, so the FCA should get a deeper understanding of how the industry works.Reuse content