Pawnbroking group H&T GROUP PLC (LON:HAT) put in a strong fourth quarter performance in 2018, ensuring that full-year results will be in line with expectations.

The group saw an 8% increase in the pledge book during the year as a result of increased customer numbers alongside increased numbers of quality watches being “popped”.

READ: Pawnbroker H&T reaps rewards from online investment

The personal loans book grew 35%, reflecting the expansion in the group's longer term, lower interest rate loan product.

H&T said momentum continued in the jewellery retail business, with sales up 7% year-on-year, while there was “strong income growth” from foreign exchange dealings, the value of which was up 22% on 2017.

"We continued to make good progress in delivering our strategy in the past year, particularly in developing our digital capability to complement our store estate,” said John Nichols, the chief executive officer of H&T.

“We have also seen growth in our secured pawnbroking lending, primarily driven by increased customer numbers. Our personal loan product offering has also been refined with a focus towards in-store lending, with more customers qualifying for our lower cost loans,” he added.

"The growth in retail sales has come through an expanded range of new jewellery and the development of both click-and-collect and online sales.

"We are particularly pleased with the growth of our foreign exchange proposition," Nichols said.

Reports of the death of the High Street have been exaggerated

Speaking to Proactive Investors, Nichols said predictions of the death of the High Street had been overdone.

“The High Street is not dying, it is evolving. Of course, online is having a big effect; we’ve all been affected, and often local authorities don’t do the High Street shops any favours but there will always be a High Street,” Nichols predicted.

In H&T’s case, they work on providing a reason for a customer to visit a physical store. In this respect, the online side of the business can be useful in “funnelling” customers to physical locations; as Nichols observed, if you are buying a £3,000 gold watch online you are probably going to want to see it in person before handing over the money.

“There’s always something going on in the stores. People like to feel involved,” Nichols said, explaining why the company runs charity promotions or in some cases simply offers the chance for a cup of tea and a natter.

“Once you’ve got them across the threshold then you are most of the way to removing the stigma that is attached to pawnbroking,” Nichols said.

That stigma definitely does exist, even though the company’s offering has extended beyond pawnbroking to personal loans and foreign exchange - “the cheapest on the High Street,” Nichols claimed.

“As someone once said to me: ‘John, you are not going to overcome 3,000 years of prejudice by putting a nice poster in the window.”

Regulations are onerous but necessary

Despite the stigma, pawnbrokers have been around “forever” and look set to stay.

“Pawnbroking is still our core business and in fact is a little bit more popular than it has ever been,” Nichols asserted, adding that business users are happy to use the service because of the quick response.

“The important thing is to borrow from a regulated firm. We are answerable to the Financial Conduct Authority and to our shareholders. The regulations are onerous but they are necessary.

“It’s all very well people celebrating the demise of short-term lenders such as Wonga but if you regulate operators like that out of existence then where is the business going to go? It’s going to go underground,” Nichols said.

Before departing for a broadcast interview with Proactive’s Andrew Scott, Nichols offered readers a top tip.

If you have a lot of jewellery, are going away for an extended break and are worried about insuring it while you are away, consider pawning it and then buying it back when you return – it may work out cheaper.

“But for heaven's sake, don’t spend the money and find you can’t buy the jewellery back,” he quipped.

Shares in H&T were up 3.5% at 295p in late morning trading.

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