Pawnbroker Albemarle & Bond warns on profit as gold tumbles
LONDON, April 19 (Reuters) - British pawnbroker Albemarle & Bond warned on Friday that profits would fall short of market expectations, showing the impact of a tumbling gold price and tough trading conditions.
The company, which buys jewellery and offers payday loans to cash-strapped consumers, said it had experienced a significant drop in profits from its gold buying business in the last three months, and expected the recent gold price drop to exacerbate the decline.
The price of gold hit a two-year low this week, suffering its biggest one-day drop since 1983 and catching investors and speculators by surprise. It rebounded to trade above $1,400 an ounce by Friday, but is still on course for a fourth week of losses.
The gold price fall would reduce future loan advances and the value of scrap recovery, Albemarle said. The company, which operates around 250 stores in the UK, said it had also been hurt by increased competition on the high street.
As a result, profits for the year to end-June would be materially below market expectations, Albemarle said in a statement after the market close.
"In these circumstances the board has decided that new leadership is needed," the company said. CEO Barry Stevenson would step down earlier than planned and the non-executive chairman Greville Nicholls would take on the executive role until a replacement was found, it said.
Analysts were expecting the company to make a pretax profit of 16 million pounds, according to Thomson Reuters estimates.
Having hit a high of around 400 pence in 2011, Albemarle shares have since been steadily falling, and closed at 190 pence on Friday, valuing the firm at around 100 million pounds ($153 million).