H Samuel owner upbeat despite August slowdown

Jewellery group Signet lost some of the sparkle from “excellent” first half results today after reporting that trading conditions cooled in August.

The guidance from the owner of Ernest Jones and H Samuel comes a day after the CBI said poor weather and interest rate rises had deterred shoppers last month.

Signet, which owns more than 1,000 outlets in the United States, announced a 14% rise in pre-tax profits to £53.9m (€79.4m) in the six months to July 31, but added there had been a “softening in the trading environment” since then.

Chief executive Terry Burman pointed out the situation may be a one-off, with weather conditions and the timing of Bank Holidays taking their toll after what he described as an “excellent” first half.

He is now preparing for the key Christmas season with an increased advertising budget and an enhanced product range, particularly in diamonds.

Mr Burman said: “While there has been some softening of the trading environment in August on both sides of the Atlantic, this is not necessarily indicative of trading prospects for the balance of the year.”

The weakness of the US dollar affected today’s half-year figures, which showed a 27% rise in profits at constant currency rates. Like-for-like sales were 7% higher although the total figure was up only 1% at £671.7m (€989.9m) because of the impact of the weak dollar.

In the UK, where the company has more than 600 outlets, Signet said total sales rose by 4.1% to £200.3m (€295.2m) with operating profits up by 11.5% ahead of a restructuring charge of £1.7m (€2.5m).

A strong performance over Valentine’s Day, the greater presence of diamonds in the sales mix and the early results of a store overhaul helped the UK division outperform the rest of the retail sector.

Signet said H Samuel achieved a like-for-like sales increase of 3.6% with Ernest Jones up 7.9%.

The shop refurbishments, which have seen Signet introduce a more open store design, will continue in the next few months with 147 outlets – mostly H Samuel sites – due to have been refurbished by Christmas.

H Samuel operates in 12 towns and cities in the Republic of Ireland.

While today’s figures were in line with expectations, shares fell more than 1% following the August sales update.

Seymour Pierce analyst Rhys Williams said: “The one worry, in an otherwise strong set of numbers, is the caveat that the trading environment on both sides of the Atlantic has softened during August. Whilst August is not a particularly important period for Signet, it is still a concern.”