THE consumer downturn is boosting Yorkshire pawnbroker Herbert Brown and its parent company Albemarle & Bond as more people pawn gold jewellery and diamonds in order to raise cash.
Leeds-based Herbert Brown was sold to rival Albemarle & Bond in a deal worth £30.7m last July to create the UK's biggest pawnbroker.
Yesterday Albemarle & Bond reported a 32 per cent increase in pre-tax profits to £5.2m in the six months to Decemb
er 31, driven by strong sales at Herbert Brown which has continued to make good progress since the acquisition.
Albemarle & Bond's chairman Charles Nicolson said the Herbert Brown business was "bedding down very well" and the group should gain from the consumer downturn.
"We will definitely benefit from the slowdown," said Mr Nicolson. "There is no doubt that the niche service we provide is very attractive to people at this time. Lending against gold has increased substantially, it's now at 60 per cent, up from 51 per cent."
The group's pawn loan book has increased 24 per cent since this time last year.
But other areas of the business have not performed as well. Third party cheque cashing has become increasingly competitive and income fell by 9 per cent over the period while pay day advances suffered from increased bad debts and fell by 7 per cent.
"In the current economic climate we are very happy with the increased proportion of the business which is being generated by pawnbroking, where the loans are secured against gold jewellery and diamonds," said Mr Nicolson. The group raised the interim dividend by 14 per cent to 2p per share.
Last summer's acquisition of Herbert Brown turned Albemarle & Bond, which is listed on the Alternative Investment Market, into the country's largest pawnbroker with 122 outlets and a pawn-loan book of more than £21m.
Herbert Brown was founded in Leeds in 1840 by John Brown and was run by the sixth generation of the family, brothers Michael, Chris and Robert Brown who have stayed on as directors.
Albemarle & Bond was founded in Bristol in 1986 as a pawnbroking service.
The largest part of the business is the issue of loans against the security of gold jewellery and diamonds.
The group sells secondhand and new gold jewellery and Herbert Brown has particular expertise in selling second-hand jewellery.
Albemarle & Bond has retained the Herbert Brown brand and has since converted one Albemarle & Bond store in to a Herbert Brown and opened another new Herbert Brown outlet.
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