H Samuel owner Signet in merger talks

Jewellery retailer Signet – owner of H Samuel and Ernest Jones – confirmed today it is in merger talks with US rival Zale Corporation.

A statement from the firm said discussions are in the early stages and there is no certainty a deal will go through. No other details were released.

Shares lifted 5% to 100.75p on the news.

Reports suggested yesterday that Zale had made an approach to Signet, the world’s biggest speciality jeweller, several months ago, to discuss a deal worth £2.3bn (€3.4bn).

Zale is North America’s largest speciality jewellery retailer and owns Zales Jewelers, Bailey Banks & Biddle, Piercing Pagoda and Mappins Jewellers among others. It operates 2,300 stores in the US, Canada, and Puerto Rico as well as through its website.

As well as in Ireland and the UK, Signet operates 1,246 sites in the United States under Kay Jewelers and Jared The Galleria of Jewellery. It generates two-thirds of its sales in the US and sales margins at the Kay brand have overtaken Zale’s shopping mall stores.

On Friday, Signet said that across the group profits were up by 10% to £30.7m (€45m), following a rise in total sales of 13.7% to £419.6m (€613m).

But it made a further loss in the UK after promotional activity required to offset tough trading conditions affected margins.

The group posted operating losses in the UK of £1.6m (€2.3m) for the 13 weeks to April 29, compared with a deficit of £400,000 (€585,000) in the same period a year earlier.

Signet was originally called Ratners after its founder Gerald Ratner until he made a notorious gaffe in 1991, calling one of the firm’s products “total crap”. He lost his job and the firm bounced back under a new name and new leadership.

Mr Ratner, who returned to the jewellery business three years ago with an online store, has told the Daily Telegraph he would be interested in buying H Samuel if it became available.

“It wouldn’t surprise me if Signet wanted to increase its presence in the US and get rid of the UK businesses,” he said.