Shares in pawnbroker Albemarle & Bond slumped as the company issued its second profits warning in as many months.
Britain’s second-biggest chain of pawnbrokers said a combination of further falls in the gold price and tough competition would leave it nursing losses in the first five months of its financial year.
The Reading-based group even confirmed it had taken the “exceptional” action of smelting down items from its retail stocks to stay within its debt limits.
The gloomy update came despite the company continuing with an aggressive cost-cutting exercise which has seen it close 33 pop-up gold buying stores in recent months.
The firm has been struggling for some time and was given a three-month reprieve by its lenders at the end of last month to patch up its overstretched finances.
The measures taken to remain within the company’s £53.5 million borrowing limit include a clampdown on lending through its Speedloan and online arm, as well as a “programme of exceptional smelting” of gold items bought by its stores.
Shares in Albemarle dropped by more than a third in early trading as the group warned that market expectations for the current year were “significantly more optimistic” than its own.
It said the situation was partly due to delays in reporting its results for the year to June 30, which had been postponed amid talks with lenders.
Albemarle cautioned in September that there was “significant uncertainty” over its current year’s profitability as it has been hammered by the falling price of gold.
It said gold prices were now 27% lower than a year earlier, adding there were “no signs of recovery” in its trading, with a 12% drop in its pledge book.
The group also said its woes were compounded by a bill for its failed attempt to secure a £35m cash injection from its biggest shareholder EZCORP last month, when talks on a deeply-discounted rights issue were aborted.
Newly appointed chief executive Chris Gillespie, who joined from doorstep lender Provident Financial, said the company was trying to get its finances in order.
He said: “Tough trading conditions have continued to impact our results, but we are making progress controlling costs and managing within our constrained banking facilities.”
The company’s store portfolio north of the border has reduced significantly in recent months and now stands at six, including three in Edinburgh.