Signet profits lose their sparkle

Jeweller Signet saw third-quarter profits fall sharply today as the slowdown in spending on the UK high street hit sales at its Ernest Jones and H Samuel stores.

Pre-tax profits fell from £7m (€10.2m) to £3m (€4.4m) in the 13 weeks to October 29 as like-for-like sales at Signet’s 601 stores in the UK dropped more than 8%.

But a strong performance in the United States meant the company remained upbeat about the all-important run up to Christmas, which represents 40% of annual sales.

Signet said: “The third quarter is traditionally a period of low profitability. Therefore the decline in results should have relatively little impact on the year as a whole.”

Pre-tax profits for the first nine months of the year were fractionally down at £55.1m (€80.5m) from £57m (€83.3m) last year.

Signet’s UK arm – which accounts for 30% of the business – posted losses of £2.5m (€3.7m) in the third quarter, compared with profits of £3.7m (€5.4m) last year.

Total UK sales for the quarter were down from £97.4m (€142.3m) to £90.5m (€132.2m), while sales for the year so far were down from £294.7m (€430.5m) to £273.8m (€400m).

This weakness resulted in UK losses of £4.9m (€7.2m) in the first nine months of the year compared with profits of £9.7m (€14.2m) last year.

The company blamed “the background of continuing difficult trading conditions”.

But the poor figures were partly offset by an increase in profits and sales in the US where Signet runs 1,202 Kay Jewelers and Jared The Galleria of Jewelry stores.

Chief executive Terry Burman said: “Group profit before tax in the nine months to date was only slightly below that of last year.

“Our US division performed extremely well whilst the UK business experienced difficult trading conditions throughout the period.

“Our businesses are in good shape and are well placed to compete. As always, results for the year as a whole will be dependent on the outcome during the all important fourth quarter.”

Seymour Pierce analyst Richard Ratner said the third quarter “was not a very important period for Signet”, but warned that although Signet was a very well run company it “cannot buck the downturn in UK mid-market jewellery”.