More people pawning jewellery amid lack of quick credit options, Ramsdens says

More people have been selling or pawning their jewellery or watches amid higher gold prices and a lack of short-term credit alternatives, retailer and lender Ramsdens has said.

The company, which has 167 stores across the UK, revealed higher profits in recent months.

This was partly driven by a 15% surge in profits from its pawnbroking service.

Pawnbroking allows people to take out a loan against the value of a piece of jewellery or a watch, and if they cannot repay the loan then the pawnbroker sells the item they pledge.

The loans accrue interest on a daily basis and Ramsdens charges an annual percentage rate (APR) of about 154% for a six-month loan.

Chief executive Peter Kenyon told the PA news agency: “Pawnbroking has grown because of the lack of alternative finance providers.

“If you want to borrow £200 you used to be able to get credit, which has been decimated, or payday lending when it was seen as reputable.

“You’ve seen growth in the likes of Klarna, “buy now pay later”, and credit unions, but if you’ve got an asset to pledge then pawnbroking is a good solution for a short-term need.”

The average loan is £180, typically amounting to a “couple of rings” that are pledged by customers in need of cash.

Mr Kenyon said people are not pledging “life-changing” amounts, but that many customers turn to pawnbroking if they need “help through cashflow difficulty”.

Meanwhile, Ramsdens also benefited from growing demand for its precious metals business.

Ramsdens buys unwanted jewellery or gold from customers and then either sells it in stores or online, or to a bullion dealer.

Gross profits from the service hit £5 million in the six months to the end of March, up from £4 million the same period a year ago.

Higher gold prices, and subsequent media reports encouraging more customers to sell theirs, has boosted the amount of gold being bought and sold by the firm.

The average nine-carat gold price was £19.45 per gram in the latest period, up from £18.25 last year.

There was slower growth for Ramsdens’ retail arm, through which it sells new and second-hand jewellery and premium watches, with profits edging up by 6%.

Stronger demand for preowned jewellery partially offset declining revenues from premium watch sales.

But Mr Kenyon said that demand for premium watches – which includes brands such as Rolex and Cartier – had started to improve in recent months as prices began to normalise.

“Some watches were selling for £30,000 12 months ago, and they’re now £20,000,” the chief said.

The company’s total pre-tax profit grew by 8% to £4 million over the half-year, and it said it expects to further grow its profitability in the months ahead.