H&T Group continued to excel in the pawnbroking sector in 2012 with an impressive set of full-year results and fresh plans to increase focus on new business areas as the cash for gold boom quietens.
During 2012 H&T became the first pawnbroker to have a pledgebook that exceeded more than £50 million, a net debt to EBITDA ratio of 1.3x and retail sales inched up 1% to £20.1 million. Reflecting this, the group successfully refinanced its debt facilities in January, securing a further £50 million four year facility with Lloyds TSB.
Year-on-year profits before tax did, however, slip 4.8% to £62.3 million, although this was in line with expectations, caused by "competitive pressure on gold purchasing" and the costs of its expansion programme, which in 2012 yielded 26 new stores.
H&T said that it will continue its store expansion programme in 2013, and has already opened six stores, but that the rate of openings will slow. H&T chief executive John Nicholls told WatchPro that the group will "revert to more of a mixture of acquisitions and greenfield sites".
Nicholls said that competition in the cash-for-gold market has lessened with many of the postal gold services dropping out of the market as the price of gold has passed it peak. Nicholls described the cash-for-gold boom as a "short-term opportunity rather than a core earnings stream" and as such the company is looking into alternative revenue streams and as such is overhauling its retail offer.
H&T said that the jewellery retail environment remained "difficult" in 2012, mainly due to the rising price of gold impacting on customer affordability – at H&T the average retail price of 9ct gold jewellery jumped 13% year on year, although the group said that its pricing remains competitive.
Total retail like-for-likes were down 14% year on year. Gross profit from retail was £9.9 million, up slightly from £9.8 million in 2011, with a flat margin year on year.
In the second half of 2012 H&T implemented a stock overhaul, and Nicholls said that the company has improved its logistic supply chain and as a result has managed to reduce its stock holding. He said: "Before it was taking a little longer to get the right stock to the right store, now we can do it within in the working week."
H&T has also been investing in staff training with Nichols claiming that the company undertakes "more training than anybody in the industry". A particular focus for the group in 2012 – and something that will continue in 2013 – is a focus on premium watch brands. H&T has been working with pre-owned watch specialist Watchfinder’s web-based The Glass Guide to help store staff offer valuations on watches brought in by customers, something that Nicholls said is working well.
The Glass Guide app works by tapping into Watchfinder’s database and allows retailers to tap in a few details of the watch brought to them by a customer and then use its library of 10,000 watch images to pick the one closest to the watch presented to them. Once they have done this Watchfinder will give them a preliminary quote within two minutes that they can offer to the customer. The watch will then have to be sent to Watchfinder for authentification but this can be done next day.