The potential benefits of Ramsden Holdings' four-part growth strategy for investors

Dr Michael Tubbs says Ramsdens Holdings provides a juicy yield along with a diverse range of financial and retail services

Ramsdens Holdings (Aim: RFX), which has a market value of 83 million, offers financial services through four channels: pawnbroking, jewellery and watch retail (new and used), precious metal purchases, and foreign currency exchange (forex). The prices of pre-owned jewelry and watches are high; for example, a diamond ring can cost anywhere from £100,000 to £40,000, while a Rolex watch can cost between £2,000 and £30,000.

Since the profit contributions from these four channels are similar, the company is well diversified. Additionally, Ramsdens provides Western Union money transfers, which slightly boosts total earnings.

The four components of Ramsdens Holdings' growth strategy.

With 169 stores across the UK and a growing online presence, Ramsdens provides customer service. Websites for forex and jewelry are available (with a click-and-collect service). In November 2024, a pawnbroking website went live, and in March 2025, a gold-buying website followed. Today, 12 percent of forex sales and 20 percent of jewelry sales come from online sales. These ratios are anticipated to rise.

The company's growth strategy consists of four main components: expanding its online presence, adding new stores, acquiring new businesses, and boosting growth from its current store estate. In comparison to their roughly 130 competitors, who together own about 220 stores, the three major UK pawnbroking companies, HandT, Cash Converters, and Ramsdens, have roughly 650 stores. There are acquisition opportunities as the industry consolidates because each company only has one or two stores.

Outside of London, there are about 350 places in the UK with a population of 30,000 or more, so there are plenty of chances to grow Ramsden's current estate of 169 stores, especially south of a line between Bristol and The Wash, where it currently only has nine stores and is searching for ways to add more in addition to finding appropriate locations.

Generally speaking, a new branch loses money in its first year, makes a tiny profit of about £30,000 in its second, and makes £100,000 in its fourth. There is currently only one franchised store out of the 169, as seven new stores were opened in 2023 - 2024 and one was acquired from a franchisee. Five more stores are scheduled to open in 2024 - 2025.

All stores that opened in 2021 - 2022 or later will see an increase in profit in 2024 - 2025 due to the fact that profits rise as a store ages. In addition to offering flexible store leases, Ramsdens occasionally moves its stores to locations with greater foot traffic and better window displays. In 2023 - 2024, three stores moved, and their performance has already improved.

Internet growth.

During the second half of 2023 - 2024, Ramsden's online sales increased by 35% year over year to £4 million, or nearly 8% of total revenue. Premium timepieces account for 65 percent of jewelry sales at Ramsdens, which has 15,000 items on its jewelry website. The websites for pawnbroking and buying gold were launched in late 2024 and March 2025, respectively. Online sales should increase as a result of both.

With 15.8 million in cash and 8.4 million in debt as of September 30, 2024, Ramsdens has a healthy balance sheet. The non-current lease liabilities are worth 7.3 million, while the current lease liabilities are 24.4 million. The business is financially strong enough to invest in new stores or make acquisitions thanks to this strong balance sheet.

To help with growth and to cover people's summer currency needs, the company also has a 15 million revolving credit facility. It had been used to withdraw 8.5 million dollars as of September 30, 2024. In 2023 - 2024, there was enough net operating cash flow to pay out sizable dividends and increase the cash pile.