Signet lose sparkle as profits drop 24%

Anglo-US jeweller Signet, the owner of H Samuel and Ernest Jones, posted a 24 per cent fall in its first quarter profit today, hit by falling sales in the US and admitting that the future in the UK looked tough.

The firm, which trades as Kay Jewellers and Jared the Galleria of Jewelry in the United States, said profit before tax fell to $38.6 million (£20 million) in the 13 weeks to May 5.

Although like-for-like sales were down 4.7 per cent in the United States, they were up 5.3 per cent in the UK, where Signet trades as H Samuel and Ernest Jones. However, the group’s Chief executive, Terry Burman, signalled that these sales were not sustainable.

“Given the increasing pressure on consumer expenditure in the UK and demanding second quarter comparatives, like for like growth is not expected to continue at this level,” Mr Burman said.

The firm said that in the UK the gross margin – a measure of profitability – was up 40 basis points due to “selective price increases” offsetting the cost of gold, which has increased steadily throughout the year according to the London Bullion Market Association.

Meanwhile, in the US, the gross margin was up 50 basis points thanks to greater promotional activity and price increases implemented after Valentine’s Day offsetting higher commodity costs.

Signet has been hit hard by a downturn in discretionary spending by consumers on both sides of the Atlantic as they cope with rising food and fuel bills and weak housing markets.

The company’s shares fell heavily on January 10 after it reported a drop in sales during the Christmas period and have almost halved in the past year. It has underperformed the UK retail index by 28 per cent in the last 12 months.

Signet closed at 63.5 pence yesterday, valuing the business at about £1.1 billion pounds. In the first two hours of trading this morning, its shares were down 2 per cent at 62.25