Ramsdens, a prominent retailer and lender with 167 outlets nationwide, has observed a notable uptick in individuals resorting to selling or pawning their jewellery or timepieces. This trend is attributed to both elevated gold prices and the limited availability of short-term credit alternatives, according to the company.
The firm, which experienced increased profits in recent months, disclosed a significant 15% surge in profits from its pawnbroking service.
Pawnbroking offers individuals the opportunity to secure a loan against the appraised value of their jewellery or watches. Should borrowers fail to repay the loan, the pawnbroker has the authority to sell the pledged item. With loans accumulating interest on a daily basis, Ramsdens imposes an annual percentage rate (APR) of approximately 154% for a six-month loan.
Peter Kenyon, Ramsdens’ Chief Executive, highlighted the growth in pawnbroking services due to the scarcity of alternative finance providers. He noted that while options like payday lending and traditional credit have dwindled, avenues such as Klarna and credit unions have emerged. Nonetheless, for those possessing assets to pledge, pawnbroking presents a viable solution for short-term financial needs.
Typically, customers pledge items valued at around £180, often consisting of a few pieces of jewellery. Kenyon emphasized that while the amounts aren’t substantial, many individuals turn to pawnbroking to navigate temporary cash flow challenges rather than for substantial financial changes.
Simultaneously, Ramsdens has experienced heightened demand for its precious metals segment. The company purchases unwanted jewellery or gold from customers, subsequently selling it either in-store, online, or to a bullion dealer. Gross profits from this service totaled £5 million in the six months ending March, marking an increase from £4 million during the corresponding period last year.
The surge in gold prices, coupled with media reports encouraging more customers to sell their gold, has bolstered the volume of gold transactions conducted by the firm. The average price of nine-carat gold stood at £19.45 per gram in the latest period, up from £18.25 the previous year.
However, Ramsdens’ retail division, responsible for new and pre-owned jewellery sales as well as premium watch sales, experienced more moderate growth with profits inching up by 6%. While demand for pre-owned jewellery partially offset declining revenues from premium watch sales, Kenyon noted an encouraging rebound in premium watch demand, particularly for brands like Rolex and Cartier, as prices returned to normalcy in recent months.
Ramsdens reported a total pre-tax profit growth of 8% to £4 million for the half-year period. The company anticipates further enhancing its profitability in the coming months.