H&T Group has said its profits will be higher than City expectations after a record-breaking year for its pawnbroking business.
Profits for 2010 should exceed the upper end of market expectations of £26 million after consumers increasingly turned to its H&T pawnbroking and Gold Bar jewellery buying outlets.
Commercial director Steve Fenerty admitted that the economic downturn had raised the profile of the business but said the growth was mainly down to opening new stores and the rising gold price, which increased by a third over the year.
Mr Fenerty said: “The rising price of gold has helped people realise the value of some of their jewellery and has helped raise our profit margins. The market has been underserved for a very long time and we were expanding before the recession hit.”
The pawnbroking business saw record lending levels in 2010 driven by an increase in the average loan and by opening new stores.
The group’s pledge book, which reflects the loans it makes to customers backed by the goods they leave as deposits, grew from £37.3 million at the end of June to a record £39.5 million at the end of December. Like-for-like sales of goods that were not reclaimed by their owners, such as cameras and musical instruments, were flat in the year, despite the snow in December.
H&T opened 13 new outlets in 2010, bringing the total to 135 H&T pawnbroking stores and 45 Gold Bar outlets, which are mainly in shopping malls.
Tesco recently announced its move into pawnbroking but Mr Fenerty said Britain’s biggest retailer was unlikely to pose a threat to H&T because it offers a postal service rather than an on-the-spot valuation.
Shares in H&T were up 4% following the update.
Andrew Wade, an analyst at Numis, described H&T as “a genuine long-term growth story”.