H&T Group PLC (AIM:HAT) said profits for 2023 came in about 40% higher than the previous year, which will make it a record for the group.
While demand for its pawnbroking services remained at record levels, the AIM-listed group said its retail arm, which sells pre-owned and new jewellery and watches, was caught up in the challenging conditions experienced by the wider retail industry in the run-up to Christmas.
As a result, group profit before tax will be around 10% below where analysts have been forecasting.
“The group made significant progress in 2023, delivering record profits and strong growth,” said chief executive Chris Gillespie.
He said demand for its pawnbroking product continues to grow and is attracting increasing numbers of customers who are new to pawnbroking, while retail customer numbers also reached record levels.
“However, as has been widely reported, customers were cautious in their spending, and this has impacted our performance for 2023,” he said.
Jewellery retail sales volumes were up around 3% year on year in the fourth quarter, but a significant skew of customer purchases to new jewellery, which is generally cheaper and offers lower profit margins, meant overall retail sales fell 3% by value, with a consequent reduction in gross profit.
Sales of watches grew 15% in the quarter by volume and value, with margins said to be starting to recover from levels seen in the middle of last year.
Pawnbroking demand was reported to have remained at record levels in all regions of the country, with aggregate lending up 19% to £260 million for the year, with the pledge book up 30% to roughly £131 million by the year end, which was ahead of management expectations.
Full-year foreign exchange revenues grew 11% to around £6.3 million, with transaction volumes up 18%, helped by the launch of the online 'click and collect' service in June.
Gold purchases were up 18% over the year, while demand for money transfers remained subdued.
Cost-curtailing actions taken in the second half led to an improvement from the first, but cost inflation remained above headline inflation rates, with suppliers said to be increasing prices ahead of April’s incoming 10% rise in minimum wage.
Efforts to deliver ongoing cost efficiencies remain ongoing, the company said.
Looking to 2024, Gillespie said: “We believe, despite this challenging backdrop, that we have the right product offering and have continued to invest in our store estate and our technology platforms.”