Ramsdens Holdings: Record Profits, Gold Tailwinds and Risks

Ramsdens Holdings ((GB:RFX)) has held its Q4 earnings call. Read on for the main highlights of the call.

Ramsdens Holdings Delivers Record Year but Flags Gold and Cost Risks

Ramsdens Holdings’ latest earnings call painted a strongly upbeat picture of its FY25 performance, with management highlighting record revenue above £100m, a 43% jump in profit before tax (PBT) to £16.2m, and a sharply higher dividend. The tone was confident and growth-focused, underpinned by strong cash generation, a robust balance sheet and clear FY26 guidance to push profits higher again. At the same time, executives were candid about key risks: heavy earnings sensitivity to gold prices, margin pressure in the currency business, and rising operating and staffing costs, all against a challenging high-street backdrop.

Record Revenue, Profit and Dividend Upside

Ramsdens crossed the £100m revenue milestone for the first time, with sales up 22% year on year and PBT surging 43% to £16.2m from £11.4m. Profit after tax reached £11.9m, translating into basic earnings per share of 37p. Reflecting the strong performance and confidence in the business, the total dividend was lifted by 43% to 16p, which includes a 2.5p special dividend attributed to exceptional trading conditions, particularly in gold. The results position Ramsdens firmly as a fast-growing, cash-generative retailer and financial services provider.

Strong Balance Sheet and High Returns on Equity

The company emphasized its financial strength, reporting net assets of £62.9m and around £15m of cash on the balance sheet, of which about £9m sits in foreign currency tills. Return on equity was approximately 20% for FY25, an attractive level in the current retail environment. Ramsdens also operates with no structural debt, and its revolving credit facility (RCF) remains undrawn, which keeps finance costs low and provides significant flexibility to fund seasonal working capital, store openings and strategic investments without stressing the balance sheet.

Gold Buying Surge Drives Profit Windfall

Gold buying was a standout driver of growth. Precious metals revenue rose 44% year on year, supported by a 14% increase in volumes purchased. Gross profit in the gold buying segment climbed by roughly 52%, as the average price of 9-carat gold increased from £21 to £28 per gram, a jump of about 34%. Management noted that this momentum has continued into FY26, with Q1 gold-buying profit up 50% and the 9-carat gold price cited at more than £40 per gram at the time of the call. This segment has become a major earnings engine, but management acknowledged that much of the upside reflects elevated gold prices.

Retail Growth Backed by Heavy Inventory Investment

Ramsdens’ jewellery retail business delivered broad-based growth, with revenue up 20% year on year while maintaining a gross margin of around 37%, despite higher input costs. Pre-owned jewellery revenue increased 35%, benefiting from both higher prices and volumes, while premium watch sales grew 13% and online retail sales rose 14%. To support this expansion and ensure product availability, the company invested roughly £8m in additional stock during the year. This deliberate inventory build underlines management’s confidence in demand for pre-owned jewellery and watches as consumers seek value and alternatives to buying new.

Pawnbroking Loan Book Growth and Healthier Repayments

The pawnbroking arm showed steady progress, with the loan book rising 7% to £11.4m at the year-end and further increasing to £12.8m by the end of December. The company reported improved repayment rates and a reduction in aged lending, which is important for credit quality and risk management. Loan-to-value ratios remain conservative, which both protects Ramsdens against asset price swings and supports better long-term customer outcomes. This disciplined approach is designed to sustain yield while limiting credit losses, making pawnbroking a stable, recurring contributor to group earnings.

Payments, Cards and New International Money Transfer Service

Ramsdens is quietly building a broader financial services platform. The company launched its own in-house international money transfer (IMT) service and expanded its currency card base to 40,000 cards, up from 20,000 a year earlier. This growth in cards and money transfer capability underpins a strategy of strengthening customer retention and recurring transactional relationships, rather than relying solely on one-off retail sales. These services increase customer touchpoints and could help offset pressure in traditional over-the-counter currency exchange.

Lower Finance Costs and Efficient Cash Management

Finance costs fell by about 20%, helped by the lack of structural debt, limited use of the RCF and the benefit of a lower interest-rate environment. Management highlighted that the business is highly cash generative, with seasonal foreign exchange funding requirements carefully managed through the undrawn RCF. This efficient use of working capital and conservative approach to leverage gives Ramsdens room to weather volatility in gold prices and high-street trading, while also funding new stores and stock investment without significantly increasing financial risk.

Earnings Sensitivity to Gold Price Volatility

Management was explicit that a significant portion of FY25’s outperformance was gold-driven and that this represents a key risk going forward. The 2.5p special dividend was deliberately framed as reflecting a gold-related windfall rather than a structural earnings step-change. If gold prices were to fall materially from current levels, both revenue and profit from gold buying could contract, pulling back group earnings. While the underlying business is diversified, Ramsdens’ earnings are currently more exposed to commodity price swings than in prior years, which investors need to factor into their expectations and valuation.

Currency Segment Faces Margin Pressure

The foreign currency business was a relative soft spot. Overall currency exchange revenue was up only 1% year on year, while gross profit declined by about 3%. The average transaction value fell around 2% and currency buy-backs were down about 5%. A key challenge has been a shift towards lower-margin channels such as click-and-collect and currency cards, which, while beneficial for customer convenience and retention, exert pressure on margins. Management will need to balance growth in digital and card-based services with pricing and efficiency measures to stabilize profitability in this segment.

Rising Operating and People Costs

Administrative expenses increased by roughly 12%, or about £4.5m, driven predominantly by higher people costs. Staffing costs rose by approximately £3.6–3.7m as Ramsdens added more employees to support growth, absorbed higher real living wage rates and dealt with increased employer national insurance contributions. These cost pressures are structural rather than one-off, meaning that future profit growth will depend not only on revenue expansion but also on productivity gains and disciplined cost control, particularly as the company accelerates store openings.

Store Opening Pace and Pre-Opening Losses

Ramsdens took a more cautious approach to physical expansion in FY25, opening only two new stores compared with a historical average of around 7.5 per year. The slowdown reflected management’s concern over changes to employer national insurance and broader high-street risk. New stores typically cost about £0.5m in cash to open, split between around £225k of capital expenditure and £275k of working capital, and usually generate a loss in the first year as they ramp up. This pre-opening drag is an important consideration for near-term earnings as Ramsdens resumes faster rollout in FY26.

Higher Jewellery Input Costs Challenge Margins

The sharp rise in gold prices has been a double-edged sword for the retail division. While higher gold values supported gold-buying profits and allowed some price uplift in jewellery, they also raised the cost of goods sold, particularly for gold-based jewellery inventory. Management managed to hold retail gross margins around 37% in FY25 despite this headwind, but acknowledged that higher input prices increase the risk to future margins if they cannot be fully passed on to customers. The company will need to carefully manage pricing, sourcing and product mix to protect profitability.

Inventory Valuation and Forecasting Uncertainty

Ramsdens carries its inventory at cost rather than marking it to current market prices, including about £9m of watch inventory. This conservative accounting approach can help avoid overstating asset values but may obscure the impact of fluctuating gold prices on the balance sheet and future profitability. Management also referenced external broker forecasts that project a decline in profitability between FY26 and FY27, underscoring the uncertainty inherent in modelling a gold-sensitive business. Executives cautioned against placing too much weight on long-dated forecasts given the potential for significant commodity price swings and changing high-street dynamics.

Guidance and Growth Plans Signal Confidence but Acknowledge Risk

For FY26, management guided that PBT will exceed £18m, signalling another year of profit growth on top of FY25’s record results. Trading has started strongly in Q1, with gold-buying profit already up 50%, supporting this outlook. Ramsdens plans to open 8–12 new stores during the current financial year, with four already slated to open by early March, and will only proceed with locations where they can target at least a 20% return on capital. Each new store requires around £0.5m in cash, combining roughly £225k of sunk capital expenditure and £275k of working capital. This disciplined but ambitious rollout strategy aims to leverage the company’s strong cash generation while maintaining returns and controlling risk in a still-uncertain retail environment.

Ramsdens’ earnings call showcased a business firing on multiple cylinders, with record revenue, strong profit growth and robust cash generation underpinning a higher dividend and an ambitious store expansion plan. Management is clearly aware that a sizeable portion of recent upside stems from favourable gold prices and that the currency and cost environments are more challenging. Even so, a strong balance sheet, disciplined capital allocation and diversified revenue streams give Ramsdens room to navigate volatility. For investors, the story is one of high current profitability with clear growth initiatives, tempered by meaningful exposure to gold prices and structural cost inflation.