A CHAIN of high street shops set up to cash in on a surge in the price of gold could be wound up over the next year after the market nose-dived.
Gold Bar, which is owned by pawnbroker H&T, now has just five outlets compared to 55 last year and has been hit by a slump in the price of the precious metal as well as competition from payday lenders. The gold price was close to $1,800 per ounce last autumn but has since fallen to near $1,300.
H&T chief executive John Nichols said it was always intended that the stores, taken on short-term leases, would only be kept open for a limited period while the price was high.
He said of the remaining outlets: “It is likely that we will be closing those at some point in time.”
Nichols added that this was likely in the next 12 months although they were currently performing well and, if conditions improved, it could be that the chain expanded again.
His comments came as the group, which has 193 outlets overall, said that its profits fell by more than a third and were likely to drop further, prompting it to slash its interim dividend.
Pre-tax profits in the first half of the year were down 39 per cent to £14.8 million compared to the same period in 2012. An interim dividend of 2.1p was declared, down from 3.8p a year earlier.
The group also announced that it was pulling out of the payday market – which is facing a Competition Commission investigation – to focus its financial services division on a new 12-month product.
Profits at H&T had surged over the past few years after it took advantage of buoyant gold prices by opening dozens of Gold Bar sites at shopping centres across the country.