H&T Group PLC Trading Update (1577L)

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RNS Number : 1577L

H&T Group PLC

12 May 2022

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

12 May 2022

Trading Update

H&T Group PLC ("H&T" or the "Group"), the UK's largest pawnbroker and a leading retailer of new and pre-owned jewellery and watches, today announces a trading update for the four months from January to April 2022.

Following the update provided at the time of the Group's preliminary results on 8 March, trading performance has remained very strong.

Highlights:

 
 --   Demand for pledge lending remains strong and at record 
       levels, with positive momentum across the customer spectrum 
       and in all geographies. H&T continues to see former and 
       existing customers returning, in many cases after a long 
       absence, as well as increasing numbers of pawnbroking 
       customers who are new to H&T. 
 --   The pawnbroking pledge book grew by the end of April to 
       GBP78.3m, up from GBP66.9m at the 31 December year end. 
       Average loan sizes have remained broadly constant at less 
       than GBP400, with loan to value ratios below 65%. Redemption 
       rates remain stable and above historic norms. 
 --   Gold purchase transaction volumes and aggregate value 
       have returned to pre-pandemic levels, at improved margins. 
       This relatively recent increase in customer demand has 
       been supported by an elevated gold price. 
 --   The Group continues to see strong demand for its high 
       quality new and pre-owned jewellery and watches. Retail 
       sales are in line with management expectations and very 
       significantly ahead of the prior year, which was impacted 
       by Covid-19 trading restrictions. Margins have been maintained. 
       Sales of new items have been particularly strong and have 
       represented 19% of total sales in the period. Online originated 
       sales represented 13% of total sales in the period. H&T 
       will be improving its online customer experience in 2022, 
       as part of the company's wider digital strategy. 
 --   Foreign exchange (FX) performance is recovering quickly 
       as customers return to overseas holidays. Transaction 
       volumes in recent weeks have returned to pre-pandemic 
       levels and are expected to build further over the summer 
       months. H&T will enhance its FX offering ahead of the 
       peak summer period, including the re-introduction of an 
       online service. The Board considers that this line of 
       business represents a growth opportunity for the Group 
       and will receive increased focus in the period ahead. 
 --   Western Union transaction volumes remain robust. In particular, 
       H&T has seen an increase in the volume of inbound transfers 
       since late 2021. 
 --   Implementation of the Group's new core point-of-sale system, 
       known as Evo, has commenced and is expected to be fully 
       deployed to the store network by the end of 2022. This 
       new system will revolutionise the point-of-sale customer 
       experience and simplify processes for H&T staff while 
       providing the Group with enhanced data including a single 
       customer view across the product range. This will support 
       better targeted marketing activity, in particular through 
       the increasing use of digital channels. 
 --   The Group's store estate stands at 258 locations. H&T 
       expects to open up to six new stores plus three relocations 
       by the end of June, extending its geographic reach. More 
       store openings are planned for the second half of the 
       year. 
 --   Following the outcome of an internal review, the Board 
       has taken the decision to cease all unsecured lending. 
       The unsecured loan book has reduced significantly since 
       lending was initially suspended in Q4 2019 and stands 
       at GBP2.2m. The Group is in consultation with impacted 
       employees, for whom it expects to be able to offer alternative 
       roles within the business. 
 --   The Group had net cash balances of GBP5m as at the end 
       of April. Funds continue to be deployed in supporting 
       the growth of the core pledge lending and retail segments. 
       H&T has funding facilities of GBP35m to support further 
       growth of the business. 
 

Chris Gillespie, chief executive of H&T, said:

"I am delighted with the progress we have made in the first four months of this financial year. In particular, demand for our core pawnbroking loans has been the strongest for many years. This reflects a growing need by customers to borrow a small sum for a short term at a time of reduced supply of such credit in the economy.

"Our focus is on continuing to deliver excellent levels of service to our customers. Our core pawnbroking and retail businesses represent significant growth opportunities as do the other financial service products we offer, and we are investing in our store estate, our technology and our digital capabilities.

"The impact of inflationary pressures is being felt across the economy, by individuals and businesses alike. We are mindful of the challenges this presents for our customers and employees. Our business is not immune to these forces, and we are working hard to manage the inflationary impact upon our cost base.

"We are optimistic for the future growth prospects of the Group and believe that pledge lending is well suited to assist consumers as they manage the peaks and troughs of their spending patterns in an environment where disposable income is impacted by rising inflation."

Enquiries

H&T Group plc

Tel: [phone]

Chris Gillespie, Chief Executive

Shore Capital Ltd (Nominated Adviser and Broker)

Tel: [phone]

Stephane Auton/Iain Sexton (Corporate Advisory)

Guy Wiehahn/ Chloë Booker-Triolo (Corporate Broking)

Haggie Partners (Public Relations)

Tel: [phone]

Damian Beeley, Ben Abbots, Hannah Clift

h&[e-mail]

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