Full-year profits at pawnbroking and jewellery chain Ramsdens are set to beat bosses' prior expectations, thanks to record high gold prices.
In first-half results to the end of March, the high street chain said revenue has grown 18% to £51.6m and pre-tax profits had risen 54% to a record £6.1m. That was driven by a strong performance across the firm's precious metals buying business, which saw gross profits boosted 53% to £7.6m.
Global economic uncertainties have driven exceptionally high gold prices in recent months with Ramsdens benefiting thanks to investment in a new gold buying website - which is said to be performing well - and customers attracted to selling their items. The chain markets some jewellery through its network of 169 shops and smelts other pieces before selling to a bullion dealer.
Speaking to BusinessLive, chief executive Peter Kenyon said: "The example we tend to give is a customer with a low value weight, but they find out how much it is worth. It's maybe pricked a few ears and opened a few eyes, and people think 'maybe I will open my draw'. At the same time you've got a bit of press around it."
Meanwhile the chain's foreign currency business saw sales growth of 2% to £146.1m with transaction values falling 2%. More customers were said to be hanging on to unspent cash after their trips, or spending what they had taken.
And following a slowdown in new store openings, the firm is now expected to open three new sites in the second half of the year before ramping back up to between six to eight new locations each financial year. Mr Kenyon said that while the Middlesbrough-based firm has the cash to make further acquisitions, the current business model provides an attract return on capital.
Mr Kenyon said: "Where the gold price is there should be a good set of a results but we're just as pleased with the progress we're making in jewellery retailing which is 18% up, pawnbroking is 11% up - that gets a little bit of benefit from the gold price, and FX sales are up despite a fall in average sales transaction value so when you net that up, the volume of foreign currency transactions are actually about 4-5% up. There are positives everywhere.
"The gold price give us that additional windfall and we've revealed a special dividend which rewards shareholders but also gives us the cash we need to continue next year."
Mr Kenyon added: "Looking ahead, the group is well placed with continued opportunities to grow. We have a strong balance sheet and good cash generation which provides options to how we allocate our capital. I’d like to thank the whole Ramsdens team for their continued support and dedication to providing outstanding customer service in our shops and online, and helping customers make the most of our services in their everyday lives.”
