Signet sales under pressure

H Samuel and Ernest Jones owner Signet posted a further slide in sales today as the jeweller saw no let-up in tough trading conditions in the US and UK.

Second quarter sales dropped 0.6% on a like-for-like basis in the UK, reversing the 5.3% hike seen the previous three months.

And a weaker performance in the US - where Signet trades as Kay Jewellers, Jared The Galleria Of Jewellery and a number of regional brands - dragged overall comparable sales down 4.5% in the 13 weeks to August 2.

However, Signet said price rises should hold profit margins steady in the US over the full year, helping lift shares 3%.

The group has been hiking prices to counter the rising cost of gold, although the increases have been more selective in the UK.

It said on releasing first-quarter results that the price rises had more than offset the gold cost increases.

Terry Burman, group chief executive, said today: "The results of the price increases continue to be encouraging and we remain on target to at least maintain at last year's level our full year gross merchandising margin rate.

"In the UK, as expected, the like-for-like sales growth of the first quarter was not maintained. However, the second quarter was still encouraging given the demanding comparatives, and the division's continued out-performance of the non-food retail category."

Total first half sales fell 3.4% on a like-for-like basis, with trade in the US down 5.2% and the UK sales up 2.3%, boosted by the first quarter performance.

Its H Samuel chain saw interim comparable sales rise 2.4%, while Ernest Jones sales increased 2.2%.

Signet is scaling back its Ernest Jones refurbishment programme amid the challenging trading environment, reducing the number of refits and relocations scheduled for the 2008/09 financial year from 46 to around 35.

The group has 1,973 retail stores as at the start of August, of which 559 are based in the UK trading as H Samuel, Ernest Jones and Leslie Davis.