Ramsdens hails strength of model amid big half year gains

Chief executive Peter Kenyon said the 175-shop group is in a “great position”

High street pawnbroker Ramsdens has hailed the diversity in its model as it reports a significant leap in half year revenue and profits.

The Teesside-based chain, which runs 175 shops across the country, continues to benefit from high gold prices but has also pointed to its multi-service offer which includes new and used jewellery and watches and travel money. New, unaudited half-year results for the London Stock Exchange-listed firm show revenue of £83.7m in the six months to the end of March, up from £51.6m in the same period last year.

Meanwhile pre-tax profits soared to £16.7m, compared with £6.1m, and operating was £17.1m, up from £6.5m. The growth was driven by a 130% increase in gross profits for the group’s precious metals buying operation to £17.5m, a 31% increase in gross profits in its jewellery retail business to £26.1m and 18% growth in gross pawnbroking profit to £7.3m.

Ramsdens described many of its established shops as “cash cows” which require minimal capital investment. Plans to open between eight to 12 new stores in its current financial year remain on track, with recent launches in Abergavenny and Ashford and new sites being prepared in Newark, Hereford and Skegness.

Peter Kenyon, chief executive, said: “The group is in a great position. While the gold profits grab the headlines, the group has also delivered gross profit growth of 18% in pawnbroking and 31% in retail jewellery. Customer numbers in FX continue to be strong with total currency exchanged broadly flat.

“The group has maintained a conservative approach to pawnbroking loan to value ratio and provides additional interest rate reductions assisting customers in financial difficulty. The strong profits we are generating are funding the growth in our working capital assets and an accelerated new store opening program, as well as rewarding shareholders with an increased dividend.”

Ramsdens’ half-year gains came despite increased overheads including greater staff costs as its headcount has grown, as well as a pay review which saw the group adopt the Real Living Wage as its entry level pay. It told investors that employment costs have been increasing by about 10% per year in recent years.

Mr Kenyon added: “Whilst the economic backdrop remains challenging with increasing employment costs, high interest rates and continued inflation, we remain highly confident in our opportunity to further strengthen the performance of our existing stores while adding new locations, executing against our established long-term growth strategy. Our balance sheet remains strong and our high level of cash generation provides options on how we allocate our capital to achieve growth.

“I’d like to thank the whole Ramsdens team for their continued focus on providing a great service and helping customers in their everyday lives.”