- First half trading ahead of expectations
- Pawnbroking loan book reaches record levels
- Ramsdens raises full year profit guidance
Shares in Ramsdens (RFX:AIM) rose 3.5% to 225p after the pawnbroker-to-jewellery retailer raised profit guidance for the year to September 2023 following strong first half trading across all four of the diversified and defensive group’s divisions.
Chief executive Peter Kenyon said his charge had delivered an ‘excellent’ performance in the six months to March 2023, during which the pawnbroking loan book hit record levels amid the ongoing cost-of-living crisis and Ramsdens’ jewellery retail business continued to shine.
PAWNBROKING BOOK HITS RECORD LEVELS
In a pre-close trading update, financial services provider and retailer Ramsdens said it now expected full year pre-tax profits to be ‘not less than £9.5 million’, ahead of the £8.9 million Liberum Capital was looking for and implying year-on-year growth of at least 14%.
Trading was ahead of expectations in the half as the Middlesbrough-headquartered company’s existing store estate traded well and six new stores were opened, leaving the business on track to deliver against its full year target of 12.
Ramsdens, whose attractions Shares highlighted here in February, said its pawnbroking loan book has increased by 13% from the year-end balance of £8.6 million to £9.7 million, a record level for the company.
Elsewhere, jewellery retail gross profit increased by over 20%, driven by further growth both in store and online.
Ramsdens’ gold buying service has seen greater demand, boosted by this year’s higher gold price, while foreign currency volumes have ticked higher in the lead up to Easter, giving the company encouragement ahead of the key summer period.
WHAT DID THE CEO SAY?
Kenyon said the investments made over recent years in Ramsdens’ jewellery retail operations ‘continue to deliver encouraging returns, including notably a record revenue performance for the key Christmas period. We continue to see strong customer demand for premium watch brands and our extensive range of gold chain and bracelet products.’
He explained that the pawnbroking service is ‘providing more and more consumers with a flexible solution for small sum, short term loans’ and the loan book ‘remains high quality with consistently high repayment levels, and we are pleased to be able to support more and more customers manage in the face of increased living costs.’
THE LIBERUM VIEW
‘Management now guides to at least £9.5 million of underlying profit before tax for the full year and we upgrade our EPS estimate by 8% as a result,’ wrote Liberum Capital, upping its profit forecast to £9.6 million and raising its price target again, from 260p to 280p.
‘We see scope for further upgrades in FY 23 and assuming foreign currency volumes return to FY 19 levels by the time we reach the FY 23 results, this would result in a 9% upgrade. We see Ramsdens as offering an attractive blend of growth and income with plenty more upside potential.’
