Pawnbroker Albemarle & Bond’s pre-tax profits have soared in its half year but its retail arm remains challenging.

Despite pre-tax profits for the group jumping 12% to £12.1m in the six months to December 31, gross profits from jewellery retail dipped from £4.1m to £2.7m.

Chief executive of the group, Barry Stevenson said selling through its retail arm had been challenging because of the high price of gold.

He said: “Retailing is a fundamental part of our group but with the higher gold price consumers are buying less gold jewellery. The weaker performance in this division has been more than offset by the strong performance in pawnbroking and gold buying.”

The group has reduced stock levels in store over the period and has opted to scrap over selling through its retail channel.

The pawnbroker’s pledge book rose 7% over the period to £38.3m against strong comparatives last year.  

The groups’s profit leap came despite costs increasing 27% as the pawnbroker pushed ahead with store expansion and invested in central infrastructure.

It opened 14 stores in its first half and is on track to open 25 in its full year, with expansion focussed in and around the M25.

Stevenson said: “We are now nearly half-way through our five year growth plan and I believe we have made good progress against the targets set. The overall trading environment has remained positive and we are therefore well positioned to capitalise further on the market opportunity.”