H&T Group PLC (AIM:HAT), the UK’s largest pawnbroker, said trading performance has been very strong in 2022.
Demand for pledge lending remains strong and at record levels, with positive momentum across the customer spectrum and in all geographies. H&T continues to see customers returning, in many cases after a long absence, as well as increasing numbers of pawnbroking customers who are new to H&T, the company said in a trading update.
The pawnbroking pledge book grew by the end of April to £78.3mln, up from £66.9mln at the end of 2021. Average loan sizes have remained broadly constant at less than £400, with loan to value ratios below 65%. Redemption rates remain stable and above historic norms.
As the price of gold trends north, gold purchase transaction volumes and aggregate value have recently returned to pre-pandemic levels, at improved margins.
The group said it continues to see strong demand for its high-quality new and previously owned jewellery and watches. Retail sales are in line with management expectations and very significantly ahead of the prior year, which was affected by Covid-19 trading restrictions, while margins have been maintained.
Sales of new items have been particularly strong and have represented 19% of total sales in the period. Online originated sales represented 13% of total sales in the first four months of 2022.
Meanwhile, foreign exchange performance is recovering quickly, as customers resume holidaying abroad. Transaction volumes in recent weeks have returned to pre-pandemic levels and are expected to build further over the summer months, helped by the resumption of online foreign exchange services.
Following the outcome of an internal review, the board has decided H&T will cease all unsecured lending. The unsecured loan book has reduced significantly since lending was initially suspended in the final quarter of 2019 and stands at £2.2mln. The group is in consultation with affected employees, for whom it expects to be able to offer alternative roles within the business.
“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,” said Chris Gillespie, the chief executive of H&T.
"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. Our business is not immune to these forces, and we are working hard to manage the inflationary impact upon our 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,” he added.