British pawnbroker Albemarle & Bond issued its second profits warning in as many months today as it said it had resorted to melting down gold items to stay within its debt limits.
Britain's second biggest chain of pawnbrokers said further falls in gold prices and tough competition would leave it nursing losses in the first five months of its financial year.
The Reading-based group, which includes Herbert Brown jewellery and pawnbroking stores, said this came despite slashing costs and closing 33 pop up gold buying stores out of its 230-store estate.
It was given a three-month reprieve by its lenders at the end of October to patch up its overstretched finances.
But it said measures taken to remain within its £53.5m sterling borrowing limit included a clampdown on lending through its Speedloan and online arm, as well as a "programme of exceptional smelting" of gold items bought by its stores.
Albemarle shares lost nearly a third of their value as the group warned market expectations for the current year were "significantly more optimistic" than its own. It said this was partly due to delays in reporting its results for the year to June 30, which have been postponed amid talks with lenders.
The company cautioned in September that there was "significant uncertainty" over its current year's profitability as it has been hammered by the falling price of gold. It said gold prices were now 27% lower than a year earlier, adding there was "no signs of recovery" in its trading, with a 12% drop in its pledge book.
The group also said its woes were compounded by a bill for its failed attempt to secure a £35m cash injection from its biggest shareholder EZCORP last month, when talks on a deeply-discounted rights issue were aborted.
