Pawnbroker Albemarle & Bond has issued a profit warning after weak gold prices hit its core businesses of pawnbroking and gold buying.
Albemarle & Bond said there is a high risk that the business may breach some of its banking covenants, which amount to £65m, after warning of “significant uncertainty” over profitability.
Gold prices fell more than 30% in the nine months to June but have rallied since July.
The firm is now in discussions with its largest shareholder Ezcorp International, to raise £35m through an issue of new shares but warned there is no guarantee of a deal with Ezcorp and its lenders.
Albemarle & Bond said: “Whilst the company’s profitability before exceptional items is within the range of market estimates for its financial year just ended (to 30 June 2013), the ongoing weakness in the gold price creates significant uncertainty over the company’s prospects for the current financial year to 30 June 2014 and for the company’s profitability.”
Albemarle & Bond has hired former Provident Financial executive Chris Gillespie as chief executive. He joins the company next month.
The business said it had taken action to improve margins. These included closing 33 unprofitable pop-up gold buying stores that were no longer profitable.
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