Sales flat and profits down at Signet‘s UK arm

Jewellery retail group Signet today reported strong sales for its third quarter, although the company‘s growth continues to be driven by its US division.

Group like-for-like (LFL) trading was up 10.6 per cent year-on-year in the 13 weeks ending October 29th 2011, but same store sales at its largest British-based operation, H Samuel, were flat.

LFLs at UK sister company Ernest Jones dropped 1.1 per cent compared to the same period in 2010, resulting in an overall same store decline of 0.5 per cent in the British Isles.

Trading for the year-to-date is actually up 0.4 per cent compared to 2010, while total UK sales for the 39-week period to October 29th stood at $451.4 million, but the division is now making a loss for the year.

Highlighting the main difference in performance between the jeweller‘s US and UK operations, Q3 net operating income increased by $30.7 million to $56.4 million (£19.6 million to £36 million) within the former but the net operating loss of the latter increased by $3.4 million to $5 million.

Profits at Signet‘s British arm have been diminishing throughout the year, with figures released in August showing that net operating income in the UK decreased by $700,000 to $2.6 million over the first half of 2011.

In the year-to-date the UK business has made a $2.4 million loss, compared to a $1.7 million income in the same 39 weeks last year.

Overall Signet profits totalled $42.5 million for the quarter and $263.5 million for the year-to-date despite H Samuel and Ernest Jones, which includes the Leslie Davis brand, holding back growth.

And although there is currently uncertainty surrounding the British retail market, which represents 20 per cent of Signet‘s annual sales, the group‘s CEO is confident in the continued progress of the jeweller on the other side of the Atlantic.

Mike Barnes, CEO of Signet, said: “Our strong sales and earnings momentum continued into the third quarter, with same store sales up 10.6 per cent and an increase in earnings per share to $0.30, or more than triple the prior year comparable period.

“Our sustained positive performance is due to the excellent execution of our strategies by our team, and I would like to thank everyone at Signet who contributed to these results.”

Looking ahead to the fourth quarter, which because of Christmas is typically the group‘s most lucrative period of the year, Barnes said he was confident that the company‘s strong performance can continue.

“We are pleased with the start of the fourth quarter, and with the majority of our sales ahead of us, believe the superior quality of our in-store experience, our well-tested merchandising programmes, and the exciting new advertising support, have us well positioned for the remainder of the holiday season.”

At the end of October Signet operated 1,860 stores, including 1,324 in the US with brands such as Kay Jewelers and Jared, as well as 536 stores in the UK.


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