Signet loses its sparkle

This Is Money13 April 2012

JEWELLERY group Signet today became the latest retailer to reveal the extent of the consumer slowdown as it reported losses at its portfolio of H Samuel and Ernest Jones shops.

Speaking ahead of the company's annual meeting later today, chief executive Terry Burman said that the stores had made a loss in the three months to the end of April, a sharp about turn in performance from last year.

Amid deteriorating consumer confidence, Signet reported operating losses of £400,000 for its UK division, down from profits of £2.6m a year earlier. News of the dive into the red comes a month after the company said like-for-like sales for the same three-month period had fallen 6.2%, with total sales down to £91.3m from £96.1m in 2004.

Signet was insulated from the downturn by the stronger performance of its US business, which improved operating profits by almost 16% to £31.4m.

Although profits as a whole for the 13 weeks to April 30 were up modestly at £27.9m from £26.1m, the UK performance is very much the fly in the ointment. On a reported basis the increase was 6.9%, reflecting the weakening of the average US dollar rate.Operating profit came in at £29.5m, an increase of 7.3% at constant exchange rates and 4.6% reported. The operating profit of £31.4m in the US was up 18.9% and offset only by the £400,000 loss sustained in the UK.

'The general retail environment in the UK remained very difficult throughout the quarter. We are very pleased with the increase in group earnings of 10% given the present challenging trading conditions in the UK. This underlines the benefit of operating on both sides of the Atlantic with a 70:30 US/UK sales mix,' Burman added.

Signet has 1,769 stores, including 599 outlets in the UK, where the group trades as H Samuel, Ernest Jones and Leslie Davis. Around 30% of its sales come from the UK and the balance comes from the 1,170 stores it operates in the US.

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