H&T Group reports 'very strong' start to 2022

The AIM-traded firm said demand for pledge lending was at record levels, with positive momentum across the customer spectrum and in all geographies.

It said it was seeing former and existing customers returning, in many cases after a long absence, as well as increasing numbers of pawnbroking customers who were new to H&T.

The company’s pawnbroking pledge book grew by the end of April to £78.3m, up from £66.9m on 31 December.

Average loan sizes were “broadly constant” at less than £400, with loan-to-value ratios below 65%, while redemption rates remained stable and above historic norms.

Gold purchase transaction volumes and aggregate value had returned to pre-pandemic levels, at improved margins, the company said.

That “relatively recent” increase in customer demand had been supported by an elevated gold price.

H&T said it was still seeing strong demand for its new and pre-owned jewellery and watches, with retail sales in line with management expectations and “very significantly” ahead of the prior year, which was impacted by Covid-19 trading restrictions.

Margins, meanwhile, had been maintained.

Sales of new items were described as “particularly strong”, representing 19% of total sales in the period.

Online sales represented 13% of total sales, with H&T set to improve its online customer experience in 2022 as part of its wider digital strategy.

Foreign exchange performance was recovering quickly, the company reported, as customers returned to overseas holidays.

Transaction volumes in recent weeks had returned to pre-pandemic levels, and were expected to build further over the summer months.

H&T said it would “enhance” its FX offering ahead of the peak summer period, including the re-introduction of an online service, with the business seen by the board as a growth opportunity that would receive increased focus.

Western Union transaction volumes were “robust”, with the company reporting an increase in the volume of inbound transfers since late 2021.

Implementation of the group's new core point-of-sale system ‘Evo’ had started, with full deployment expected by the end of 2022.

H&T’s store estate stood at 258 locations at the end of April, with the firm set to open up to six new stores as well as three relocations by the end of June, and more openings planned for the second half.

Following the outcome of an internal review, the board said it had decided to cease all unsecured lending.

The company’s unsecured loan book had reduced “significantly” since lending was initially suspended in the fourth quarter of 2019, and stood at £2.2m.

H&T said it was in consultation with impacted employees, for who it expected to be able to offer alternative roles within the business.

The company had net cash balances of £5m as at the end of April, with funds being deployed to support the growth of the core pledge lending and retail segments.

H&T said it also had funding facilities of £35m to support further growth of the business.

“I am delighted with the progress we have made in the first four months of this financial year,” said chief executive officer Chris Gillespie.

“In particular, demand for our core pawnbroking loans has been the strongest for many years.

“This reflects a growing need by customers to borrow a small sum for a short term at a time of reduced supply of such credit in the economy.”

Gillespie said the company was focussed on delivering “excellent levels” of service to customers.

“Our core pawnbroking and retail businesses represent significant growth opportunities as do the other financial service products we offer, and we are investing in our store estate, our technology and our digital capabilities.

“The impact of inflationary pressures is being felt across the economy, by individuals and businesses alike.

“We are mindful of the challenges this presents for our customers and employees.”

The business was not immune to such forces, Chris Gillespie said, with the firm working to manage the inflationary impact on its cost base.

“We are optimistic for the future growth prospects of the group and believe that pledge lending is well suited to assist consumers as they manage the peaks and troughs of their spending patterns in an environment where disposable income is impacted by rising inflation.”

At 1453 BST, shares in H&T Group were up 0.28% at 357p.

Reporting by Josh White at Sharecast.com.