Pawnbroker sees end of golden run

Gold ringA slowdown in the high street "gold rush" has left pawnbroker Albemarle & Bond facing its first drop in annual profits in two decades.

Albemarle's income from gold buying grew by 18% in the six months to June 30, compared with an "exceptional" 88% rise in the previous half year when households looked to raise cash by selling jewellery.%VIRTUAL-SkimlinksPromo%
The company, which has 184 stores and 50 gold buying pop-up stores, said there was a "sudden slowdown" in demand since a peak in March and that gold buying levels were likely to continue to fall back, affecting group profits in the current financial year to June.

Shares fell 10%, even though results for the last financial year showed profits rose for the 21st year in a row, up 2% to £21.4 million.

The group has seen gold prices pull back after three years of more than 20% compound growth a year, although the cost of gold ended the year "broadly stable", according to Albemarle.

Chief executive Barry Stevenson said: "The expected downturn in the gold buying market happened very quickly and has set a new level to which we have quickly adapted.

"We expect gold buying to continue to be a significant profit contributor to the group, albeit at much reduced levels to that achieved at the peak."

Reading-based Albemarle, which also trades as Herbert Brown, said it had seen signs of a recovery in its retail arm, with a return to like-for-like sales growth in the second half thanks to the introduction of ranges of second hand prestige watches.

Overall annual retail sales fell 6% in the year to June, but an "exceptional" first half performance from the gold buying business and double digit earnings growth from its "cornerstone" business in pawnbroking and its pledge book helped overall pre-tax profits.

Albemarle will slow its store opening programme in response to the drop in gold buying, having taken advantage of the so-called "gold rush" to double shop numbers over the past three years. The group will now look to open five stores in the current year. Albemarle was founded in Bristol in 1983 and bought Leeds-based Herbert Brown in 2007.

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