Staff at Maidstone branch
The pawnbroking loan book increased to a record £10.3 million / Image source: Ramsdens
  • Strong trading continued in the second half
  • Annual profits topped £10 million
  • Precious metals the standout performer

Pawnbroker and jewellery retailer Ramsdens (RFX:AIM) delivered record profits in the year ended 30 September 2023 as the cost-of-living crisis drove bumper demand for pawnbroking and gold buying, news that triggered a 5.5% share price rally to 200p.

Drawing strength from its diversified and defensive business model, Ramsdens continued to trade well during the second half, supporting a rise in full year pre-tax profits from £8.4 million to a record haul of ‘more than £10 million’.

That’s ahead of the £10 million forecast by Liberum Capital, which called out precious metals as ‘the standout divisional performer’.


In the pawnbroking division, the total loan book continued to increase to a record £10.3 million and demand remains high, with August a record month for lending.

Liberum believes that ‘the ongoing cost of living crisis and possibility of recession in full year 2024 will see more money being lent to customers through the pawnbroking business as average household bills increase and weekly disposable incomes reduce’.

That is positive in terms of the earnings outlook for Middlesbrough-headquartered Ramsdens and its pawnbroking rival H&T (HAT:AIM).

In the retail jewellery business, investments made in Ramsdens’ store and online propositions continued to pay dividends with revenues up over 20% year-on-year.

Retail jewellery is exposed to discretionary spending trends, but management has not noticed any pricing weakness and demand remains buoyant despite the cost-of-living squeeze.

Ramsdens’ precious metals arm enjoyed a strong second half driven by higher volumes as customers looked to take advantage of the high gold price, which helped to offset weakness in the foreign exchange business.


CEO Peter Kenyon said he was ‘pleased with the group’s continued delivery against its long-term growth strategy, with good progress made during the period in each of our diversified income streams.’

Kenyon added: ‘While the economic backdrop is challenging and Ramsdens is not immune to inflationary cost pressures, particularly energy and payroll, the board remains confident that Ramsdens is in a good position to continue its positive momentum into the new financial year underpinned by the group’s proven and diversified business model, strong brand and clear growth strategy.’

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‘If anyone wants proof that the cost-of-living crisis is still hurting parts of the country, just look at Ramsdens’ latest trading update,’ commented Russ Mould, investment director at AJ Bell.

‘The company has been a beneficiary of hardened times and its core pawnbroking operations have been busy, to put it mildly.’

Having already raised its estimates five times in the last 16 months, Liberum is sticking with its forecasts for now, continuing to expect revenue of £78.6 million and underlying pre-tax profits of £10 million.

‘While management guides to profit before tax of more than £10 million and therefore higher than our estimate, we wait to upgrade estimates given the year-end has only just passed and the year-end audit is in its early stages.’

The broker has a ‘buy’ rating and 290p price target for Ramsdens’ shares, which it sees as ‘too cheap given the track record of delivery and upgrades. This is evidenced by the fact that Ramsdens has produced an attractive total shareholder return since its IPO in February 2017, delivering a share price compound annual growth rate of circa 11%, before taking into account the dividend yield, which has averaged around 4%.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Steven Frazer) own shares in AJ Bell.


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Issue Date: 05 Oct 2023