REG - H&T Group PLC - Trading Update and Notice of Results

H & TAnnouncement

23/01/2024 07:00

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RNS Number : 5283A  H&T Group PLC  23 January 2024

23 January 2024

H&T Group PLC

("H&T" or the "Group")

 Trading Update and Notice of Results

 

H&T Group Plc ("H&T" or "the Group"), the UK's largest pawnbroker and
a leading retailer of high quality new and pre-owned jewellery and watches,
today provides an update following completion of the financial year ended 31
December 2023.

Performance in the fourth quarter of the year was robust. The Group expects to
report record profits for 2023, up c.40% year on year.

As has been widely reported, retail trading conditions in the peak
pre-Christmas period were challenging. This was particularly the case in
December. As a consequence, reported pre-tax profits for the year are now
expected to be approximately 10% below current market forecasts.

Pawnbroking

Demand for our core pawnbroking product remains at record levels, across all
geographies. Aggregate lending in 2023 amounted to £260m (2022: £218m), an
increase of 19%. As at 31 December 2023, the pledge book amounted to c.£131m,
up 30% on the 31 December 2022 balance of c.£101m, and ahead of management's
expectations. Average loan sizes have remained broadly consistent with those
for the first half of the year, with the median loan size being £201 (30 June
2023: £200). Redemption rates are consistent at c.85%. Loan to value ratios
remain at c.65%.

Action taken in mid-2023 to mitigate valuation volatility in respect of
certain watch brands resulted in the proportion of watch-based lending falling
from 17% of total lending in June, to 14% in December. The value of the pledge
book secured on watches at the year end reduced by c.£1.25m relative to 30
June. Loans secured on watches currently represent 15% of the pledge book (30
June 2023: 17%).

The Group has implemented changes to its pricing structure for pledge lending,
in order to improve yield and generate incremental revenue. Loan demand to
date in January has been particularly strong.

Retail

Trading conditions in the fourth quarter were challenging, given pressure on
customers' disposable income. Against this backdrop, sales by volume of items
increased 3% relative to the fourth quarter of 2022. However, customers
displayed caution in their spending, with a significant shift towards lower
priced items.

New jewellery items and coins have an average price point of £73, whilst
pre-owned jewellery items and coins have a higher average price point of
£199, at higher margins. There was a significant trend by customers towards
the purchase of new items, which we believe was price related. New items
represented 62% of sales by volume in the quarter (Q4 2022: 53%) and 33% of
sales by value (Q4 2022: 25%). In particular, sales of new earrings and coins
(which attract a lower margin) were buoyant.

Sales of watches both by volume and value, grew in the fourth quarter by 15%
year on year, at an average price point of £1,600. Margins are beginning to
recover from mid-2023 levels.

As a result of the changed mix of sales, volume and blended margin, overall
sales in the quarter fell 3% by value year on year, with a consequent
reduction in gross profit earned. This was particularly apparent in December,
which followed a more encouraging November.

Foreign Currency ("FX") and Holiday Money

Full year foreign exchange revenues grew 11% to c.£6.3m (2022: £5.7m) with
transaction volumes up 18% year on year.

The Group launched its on-line 'click and collect' service in June 2023. We
are pleased with early progress. Average transaction value for 'click and
collect' has been significantly higher than for over the counter transactions
at c.£700, compared to c.£400 for over the counter.

Good progress is being made in delivering the strategic growth potential of
this product. However, it is taking longer than anticipated to achieve
forecast volumes and revenues. Momentum continued to build throughout the
second half of the year, including in the fourth quarter and into 2024.

Gold Purchase and Scrap

Gold purchase by value grew 18% for the full year.

Scrap margins have remained broadly consistent.

Other Services

As expected, demand for money transfer remains subdued, with transaction
volumes down year on year as pressure on disposable income led customers to
remit and receive funds less often. This dynamic applies across all
geographies and currencies.

Cheque cashing volumes and commissions were broadly flat year on year.

Costs

As previously advised, firm action on costs was taken in H2 2023 and as a
result, cost inflation moderated relative to H1 2023 as expected. The Group
remains subject to cost inflation which is above headline inflation rates, in
particular following the forthcoming 10% rise in minimum wage from April 2024,
and as a result of price increases by key suppliers. Action will continue to
be taken to control costs and deliver ongoing cost efficiencies.

Chris Gillespie, H&T chief executive said:

"The Group made significant progress in 2023, delivering record profits and
strong growth. Demand for our core Pawnbroking product continues to grow and
is attracting increasing numbers of customers who are new to pawnbroking.

We were delighted to welcome record numbers of retail customers in the
pre-Christmas period. However, as has been widely reported, customers were
cautious in their spending, and this has impacted our performance for 2023. We
believe, despite this challenging backdrop, that we have the right product
offering and have continued to invest in our store estate and our technology
platforms.

I cannot thank our people enough for their unwavering commitment and
enthusiasm. I look forward to updating the market further in March."

 

 

Notice of Results

The Group expects to publish its preliminary results for the financial year
ended 31 December 2023, on Tuesday 12 March 2024.

 

Current market consensus for profit before tax for year ending 31 December
2023 is £29.9m

 Enquiries
 H&T Group plc
 Chris Gillespie, Chief Executive Officer          +44(0)20 8225 2700
 Diane Giddy, Chief Financial Officer
 Shore Capital Ltd (Nominated Advisor and Broker)                +44(0)20 7408 4090
 Stephane Auton/Iain Sexton (Corporate Advisory)

 Guy Wiehahn/Isobel Jones (Corporate Broking)
 Alma Strategic Communications (Public Relations)  +44(0)20 3405 0205
 Sam Modlin                                        handt@almastrategic.com

 Andy Bryant

 Rebecca Sanders-Hewett

 Will Merison

 

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