Pawnbroker H&T reported bumper profit before tax of almost 40 per cent, as cash-strapped Brits continue to flog their valuables during the cost of living crisis.
The listed company said it raked in £26.4m before tax for 2019, up from £19m the previous year, marking a rise of 39 per cent.
It said profits after tax also soared, sitting at £21.1m, up 42 per cent on £14.9m on the previous.
Pawnbrokers work by judging the value of items, a ‘pledge’, before loaning an individual money in return. If the person pays back the loan, they get their item back.
H&T said the growth in its pledge book had increased 28 per cent in the last year to £129m, up from £101m, while demand for pledge lending was at “record levels”.
It added that net revenue from pledges soared by 36 per cent to £69.5m from the previous year’s £51m.
It wasn’t all straightforward, however, with a few bumps in the jewellery and watch sector in particular. It said sales were up by eight per cent in this category to £48.6m, but margins were hit by challenging market conditions for certain watch brands – especially during the Christmas period.
In January, pawnbrokers Ramsdens also recorded ‘milestone’ full year profits.
In the last five years, H&T’s share price has increased by more than 11 per cent, rising in particular after lockdown, from 267p in December 2021, to 490p in December 2022, it told markets this morning.
In February, H&T snapped up Essex firm Maxcroft, a longstanding pawnbroking business based in Essex alongside £25m of additional financing to support growth.
The pawnbroker’s chief executive Chris Gillespie said it “made significant progress” despite trading in “a challenging environment for both businesses and individuals”.
“Pawnbroking is our core business and is attracting increasing numbers of new customers. Throughout the year, we saw record demand for our pawnbroking service and this has continued into 2024, with January being a new record month for lending.”
“Whilst retail trading conditions, particularly in the fourth quarter, were challenging given pressure on customers’ disposable incomes, sales increased year on year by eight per cent to £48.6m.”
“Pleasingly, demand has remained robust in the early months of 2024. We believe the reasons for the strength of this demand include the growing attractiveness of buying pre-owned products and the environmental and sustainability benefits this brings.
Looking to the rest of the year, the pawnbroker said demand “will remain high as the ongoing impact of inflation on customers’ disposable incomes creates record levels of demand for small sum, short term lending, at a time of severely constricted supply”.
“We are also seeing growing demand from customers who are business owners, seeking finance for working capital against pledged personal assets”.
H&T also said it would keep expanding its network of stores, with “between eight and 12” new sites opening this year.