H&T Group (HAT), a U.K. pawnbroker, fell to the lowest price since its initial public offering in 2006 after plummeting gold prices hurt trading and the company reduced its payday loan offerings amid regulatory pressure.
The price of gold, which has slumped about 21 percent this year, will contribute to pretax profit in the second half that will be “materially below” that of the first six months, the Sutton, England-based company said today in a statement. Pretax earnings fell 39 percent in the first half to 4.6 million pounds ($7.1 million).
The pawnbroker is also revising its loan products as the U.K. Office of Fair Trading tries to tighten regulation of short-term loans at high interest rates, on concern lenders are targeting people with poor credit histories and failing to clarify the full costs. The OFT referred its investigation to the Competition Commission in June.
H&T fell as much as 17 percent to 142 pence, the lowest since May 2006, and the biggest drop among stocks on London’s Alternative Investment Market. The shares traded at that price at 11:37 a.m. in London, extending the decline this year to 49 percent and valuing H&T at 52 million pounds ($81 million).
“The volatility of gold buying will weigh on the results as long as the gold price remains depressed,” Andrew Watson, an analyst at N+1 Singer Ltd, wrote in a note to investors. Watson, who had a buy recommendation on the shares, placed his rating under review.
H&T has started new initiatives that will “weaken short-term profitability but with the goal of improving long-term customer retention,” Chief Executive Officer John Nichols said in the statement. H&T extended foreign exchange throughout the business, started a loan store that targets the Asian community, and is testing a buy-back service for high-end electronics.
Albemarle & Bond Holdings Plc (ABM), a British pawnbroking competitor, fell as much as 6.4 percent to the lowest intraday price since April 23, and was down 4.3 percent at 139 pence. The company said in April that fiscal-year profit would be “materially” below analysts’ estimates because of an accelerating decline in profit in the gold-buying unit.
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