Britain's oldest pawnbrokers cash in on the credit crunch

By Mathieu Robins
Tuesday 13 January 2009 01:00

As the woeful economy eats into the sales figures and incomes of retailers, forcing many household brands into the hands of receivers, one profession remains aloof from the credit crunch.

Harvey & Thompson, the UK's largest listed pawnbrokers, yesterday announced good trading and a record number of store openings as its clients – a high proportion of whom it says are regulars and belong to families that have used its services for generations – continue to hand in their valuable possessions for cash loans.

The firm, which is based in Sutton, Surrey, but operates throughout the country, said its second-half results will be ahead of expectations. The company, which opened its first store on London's Vauxhall Bridge Road in 1897, grew by 16 stores last year and now operates in 105 premises. H&T provides services organised around traditional pawning – taking customers' possessions such as jewellery as collateral for providing a loan.

For example if a customer brings in a gold necklace, H&T will first check the quality of the metal – aiming for 9 carats or more – it then runs a security check to try to screen out stolen items before agreeing on a period for the loan, which is available for up to six months. The company never lends more than 50 to 80 per cent of the value of the item. And while pawn shops resell many items after customers choose not to return the cash, H&T says 89 per cent of people using the service do redeem their items. The company's average loan size is £120.

The company also provides other forms of cash advance including payday advance loans, cheque cashing, unsecured lending of as much as £750 for up to a year, prepaid credit cards and gold purchasing.

The firm's on-site jewellery stores – whose inventory is made up of items not reclaimed by those who have left them as a deposit for loans – also showed a rise in sales in the past year.

And while banks are increasingly reluctant to lend, pawnbrokers continue to offer their loan services.

"It's the same model that has been going around for 3,000 years," H&T's chief executive, John Nichols, said.

Sales in all the company's business areas grew in double-digits last year except for jewellery sales that rose 3 per cent and cheque cashing that remained flat as banks issue fewer cheques. Mr Nichols added that he doesn't feel much competition from potential rivals such as eBay, although the firm does plan to start rolling out more of its offerings over the internet.

Other pawnshop firms such as H&T's rival Albemarle & Bond and the more upmarket TM Sutton are also likely to be flourishing during the banking difficulties, said Mr Nichols.

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