Shares in Ramsdens (RFX) rallied after the financial services-to-retail group delivered its third profit upgrade in three months.
The bulk of the FY26 upgrade reflected the positive impact of the sky-high gold price on its precious metals division.
However, Ramsdens is also seeing continued strength in jewellery retail and pawnbroking.
For the year to September 2026, Ramsdens now expects pre-tax profits will be ‘at least £28.5 million’. That is comfortably ahead of the £24.1 million consensus estimate.
If the favourable gold price continues and summer currency volumes are in line with last year, profits could potentially hit £31.5 million. The Teesside-headquartered firm also pointed out that H1 FY26 profits will exceed the £16.2 million generated in the whole of FY25.
Precious things
AIM-listed Ramsdens’ precious metals arm continues to perform strongly. In addition to benefiting from continued gold price strength, the group has enjoyed a material pick-up in volumes.
The company said strong demand for pawnbroking loans has continued with record new lending in March and April. In fact, the pawnbroking loan book reached a record £14.1 million in early May.
‘This is despite continued conservatism in relation to the move in gold prices,’ noted broker Cavendish, ‘leaving the business well positioned in the event of any pull back in gold prices.’
Elsewhere, jewellery retail revenue is roughly 25% ahead year-on-year with gross margins ‘slightly improved’.
The only slight disappointment is the foreign currency exchange business. Commission levels are roughly 9% lower year-on-year. This reflects the continued migration towards lower margin online and currency card sales.
Ramsdens also warned that fuel shortages impacting summer flights could hit international travel. And this would have a negative impact on its foreign currency sales.
Strategic value
Cavendish reiterated its ‘buy’ rating and upgraded its price target from 550p to 587p.
‘Given a lack of listed peers in the UK and the diversity of the group’s revenue streams, we believe that a sum-of-the parts approach represents the fairest way of valuing Ramsdens,’ commented the broker.
‘Should current gold prices be sustained, we see material upside to the valuation, a view also supported by the strategic value of the UK pawnbroking sector.’
Ramsdens’ upgrade cycle continues to be driven by the soaring price of gold. But the company is so much more than just a play on the yellow metal.
Its pawnbroking and retail businesses are seeing continued strength. In addition, Ramsdens remains in expansion mode, with between ten and 12 new stores to open in FY26.
Sharesify is confident demand for its value-for-money services should remain robust in these testing economic times. We also believe Ramsdens could draw a premium-priced takeover bid in time.
Remember, its pawnbroking rival H&T was acquired by US-based FirstCash last year for 650p a share, a 44% premium to the undisturbed share price.
Disclaimer: James Crux has a personal investment in Ramsdens.
Read the press release here: https://www.ramsdensplc.com/investor-relations/regulatory-news-service
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