Pawnbrokers expand as austerity and high gold price boost profits

Albemarle & Bond to open 15 more stores in the current year
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Britain's booming pawnbroking industry is continuing its relentless march up and down the country's high streets with Albemarle & Bond – one of the "big two" along with H&T group – reporting buoyant trading.

With household finances stretched as a result of pay freezes and high inflation, demand for short-term loans to raise cash have sent people flocking to pawnbrokers, which have been investing in huge store expansion programmes. Albemarle & Bond told shareholders at its annual meeting yesterday that over the four months to the end of October "demand for short-term cash has remained high, and with a strong gold price, the group's services enabling customers to access good value loans by pawning gold jewellery and realise cash by selling unwanted gold jewellery have continued to grow".

Albemarle & Bond, run by Barry Stevenson, the former boss of Wyevale Garden Centres and one time retail director of Marks and Spencer, now has more than 200 outlets. Helped by buoyant trading, the group expects to open a further 15 stores by the end of the financial year, with an additional two gold "pop-up" stores by Christmas. There are now 169 stores and 38 gold "pop ups", which are typically located in places such as shopping malls.

The group recently posted higher profits for the 20th year in a row, with earnings up 5 per cent to £21m in the year to 30 June.

Pawnbrokers have in many ways stepped into the gap created by mainstream lenders being far more selective about who they will do business with. The fact that anyone without an all but spotless credit record can now find it all but impossible to get credit has created a huge opening for pawnbrokers such as Albemarle & Bond, which is one of the 100 largest firms on the London Stock Exchange's Alternative Investment Market.

Because of the high gold price, chairman Greville Nicholls said much of the gold that the company buys is being melted down for scrap: there is little appetite among consumers for buying jewellery. He also said that stores within the M25 – where it has 37 outlets – were performing "particularly well".

Mr Nicholls said: "The group is in a strong financial position. The good start to the year leaves us well placed to meet management expectations for the full year and I look forward to reporting further progress."

While pawnbroking remains something of a rare success story in a Britain battered by economic gloom, it has not been without controversy. Campaigners for those on low incomes have expressed concern about the business of offering consumers, particularly those with low incomes, high interest short-term loans such as "payday loans".

Albemarle & Bond, for example will allow people to borrow £100 for 20 days, charging a total of £10.84. That equates to an annual equivalent interest rate of 581.9 per cent. But industry figures frequently argue that their services are valued by customers and that their charges are transparent, unlike some other forms of credit.

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