High street name Ramsdens has seen its pawnbroking books boosted to £7.5m in the first half of the year as consumer habits return following the pandemic.
The Middlesbrough-based lender and retailer saw its loan book grow from £5.7m in the same period of 2021 and said the squeeze on household incomes would likely lead to further lending.
CEO Peter Kenyon said: “Pawnbroking is growing, really as a result of things normalising. In Covid times you couldn’t go out, you couldn’t get a coffee or a beer so people spent less and paid off their loans. People have spent more over the last 12 months, they start to overspend, have gaps in cashflow and they are starting to be impacted by rising living costs and pawnbroking is that short term, small sum solution for people, so demand has increased on pawnbroking.
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“I think it will grow. It’s that short-term solution, so if people get an unexpected bill that’s larger than they think and they’ve got a gap in their cash flow, if they’ve got a jewellery asset, they can always raise cash quite quickly and get a loan with a pawnbroker or ourselves, so I think there will be that demand, it will continue. But people are very careful. Pawnbroking customers are very careful because it is their store of wealth. They have to give us an asset and they have a confidence they can repay the loan. It’s just over 10% that don’t pay the loans back and for those 10% they don’t have any debt consequences if we sell the goods and there’s a shortfall. If we sell the goods and there’s a surplus that money is due back, and we pay it back to customers.”
The company also saw jewellery sales rise 62% to £13.08m after investing in window displays of its new and second-hand products, while online jewellery retail sales increased by 48% year on year to £2m.
Meanwhile, foreign currency exchange sales rocketed from £20m to £94m, but have still yet to reach pre-pandemic levels, currently reaching around 85% of those rates, and gross profit from that arm of the business increased from £1m to £3.4m. Mr Kenyon said the firm expects the firm’s foreign exchange business to return to normal next year.”
“Pre-Christmas we were at 30% of normal levels, March 60% and May was 85% if normal levels. I don’t think we’ll get to 100% this summer but you don’t know - there’s great demand for travel so that has recovered well.”
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Ramsdens currently operates 156 stores across the country, and Mr Kenyon says the firm has set a target of 200 shops to be opened within the next three to four years – expansion which he said should lead to the creation of around 200 new jobs.
Mr Kenyon said: “Our first target is 200 and hopefully we can do that in the next three to four years. Including the head office that would create up to 200 jobs.”
Those jobs include around 50 roles set to be created in the next four months through new store openings, adding to the latest shops in Chatham and Glasgow during the period, as well as a store acquisition in Boscombe.
Five further openings are expected in the second half of the year, with a “healthy pipeline” of new stores planned for 2023.
Across its network of stores it said lease renewals had resulted in rent reductions or greater flexibility, and sometimes both. Three stores - including Carlisle, Newcastle and Durham - had been relocated in May to take advantage of lower rents and better footfall locations.
He said: “Newcastle is a prime example. We were in Grainger Street, halfway down to the station, we were out of the way. It was the old pawnbroking model of ‘the customer finds you’. But Ramsdens is more than that, we’re quite diversified, retail is growing, foreign currency is our biggest revenue stream and we want to be where the people are. That’s why we moved to Eldon Square, and why we’re on the central square in Durham. We’re a broader business.”