Ramsdens shares rocket as pawnbroker cashes in on gold boom
Shares in pawnbroker Ramsdens rocketed as it looked poised to take advantage of gold prices, inflated by the Iran war, by taking as much as £28m this year.
The firm’s share price soared by more than ten per cent on Wednesday, to 404p, leaving it up more than four per cent in the year so far.
Gold prices reached record highs of $5,500 per ounce at the start of the year, with Ramsdens estimating values are up 50 per cent from the year before.
The London-listed business had forecast a £21m full-year pre-tax profit but now says it could take anywhere between £24m and £28m, up from £16m last year.
The firm’s jewellery retail revenue is up 25 per cent year on year and its pawnbroking loan book has grown by 18 per cent to £14m.
The pawnbroker is positioned to cash in on soaring gold prices, with plans to open up to 12 new stores in the current financial year.
Golden era set to last
“Based on the current geopolitical and economic climate, the Board believes that the gold price could remain elevated throughout the second half [the year],” the firm said.
The company, which is listed on the AIM all-share exchange, said the Middle East conflict is unlikely to affect its foreign currency sales as its main income in this sector is from selling Euros to tourists holidaying in Europe.
Foreign currency commissions are five per cent down on this point last year, which Ramsdens said is due to the move towards online and currency card sales, rather than a decline in travel to the Middle East.
Chief executive Peter Kenyon said: “In addition to underlying progress across the business, we continue to benefit from the high gold price, which is significantly boosting both customer demand and profits within our purchase of precious metals segment.”
The firm, which has over 160 stores in the UK, posted a 22 per cent jump in turnover to £117m as rising gold prices began to take effect.
The County Durham-based business recently founded new stores in Wakefield, Hull and Sheerness, which it said have traded well since their opening.
Russ Mould, investment director at AJ Bell, said: “Surging gold and silver prices are not just good news for the companies which dig the stuff out of the ground.
“It’s hard to know just how long the good times will last, but for now Ramsdens is enjoying a golden period. Shareholders will be encouraged to see the company building on a position of strength by continuing to roll out new stores.”