Shares in US-based Signet Jewelers (SIG) jumped 6 per cent after the retailer of diamond rings and gold watches reported a sparkling full-year result. A combination of 4 per cent like-for-like sales growth and the acquisition of Zale last May pushed adjusted EPS up 24 per cent to 563¢ (378p).
The fourth quarter was particularly strong. The Sterling division, which shelters key US brands Kay and Jared, delivered record operating profit, while in the UK - home to high-street mainstays H.Samuel and Ernest Jones - like-for-like sales grew 8 per cent. That was the highest rate of fourth-quarter growth in 13 years, and the UK division also reported its best operating profit in three years.
Meanwhile, the Zale acquisition in the US and Canada seems to be proving a winner, with same-store sales from the newest member to the Signet family up 4 per cent. Management claims the business is on track to achieve cost savings of between $150m and $175m in three years, which seems credible given that Zale currently has much lower margins than Sterling.
The fall in reported pre-tax profit reflects a slew of one-off costs to acquire and integrate the inefficient Zale business. Borrowing costs were also higher, as Signet funded the deal with debt. The consensus adjusted EPS forecast for the current financial year is 687¢, up 22 per cent on last year.
| SIGNET JEWELERS (SIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 9,122p | MARKET VALUE: | £7.3bn | |
| TOUCH: | 9,115-9,129p | 12-MONTH HIGH: | 9,180p | LOW:5,660p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 3,504¢* | NET DEBT: | 45% | |
| Year to 31 Jan | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 3.44 | 300 | 234 | nil |
| 2012 | 3.75 | 502 | 376 | 20 |
| 2013 | 3.98 | 557 | 437 | 48 |
| 2014 | 4.21 | 567 | 459 | 60 |
| 2015 | 5.74 | 541 | 477 | 72** |
| % change | +36 | -5 | +4 | +20 |
Ex-div: na** Payment: na** £1=$1.48 *Includes intangible assets of $966m or 1,205¢ a share **Final quarterly dividend of 18¢ paid on 26 Feb. First-quarter dividend payment in respect of 2016 financial year of 22¢ to be paid on 27 May with ex-div date of 30 Apr | ||||
