Strong growth in the US underpinned record results from Signet, but the jeweller's UK business continues to prove a drag and a major overhaul is planned.
Same-store sales at the group's two UK chains, H Samuel and Ernest Jones, improved 2.1 per cent in the second quarter, although an increase in promotional sales meant gross margins slipped sharply, resulting in a loss of $0.3m (£0.19m loss). However, management said that was better than expected, and has targeted a 10 per cent operating margin in the UK within three years. That will include a significant rationalisation of its store portfolio away from small high-street centres towards major malls - a familiar pattern in the UK retail industry.
Chief executive Mike Barnes noted that this transition took place in the US some time ago, and the results there continue to improve, with the operating margin there hitting a record 16.7 per cent. That was driven by an 8.2 per cent increase in US same-store sales, with an especially strong performance from its core Kay chain, which accounts for half of the group's revenues. Mr Barnes was hopeful that new products would drive further improvement in the forthcoming holiday seasons.
Broker JPMorgan expects full-year EPS of 425¢ (up from 372¢).
SIGNET JEWELERS LTD (SIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,026p | MARKET VALUE: | £2.51bn | |
| TOUCH: | 3,010-3,028p | 12-MONTH HIGH: | 3,228p | LOW: 1,960p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 2,546¢ | NET CASH: | $238m | |
| Half-year to 28 Jul | Turnover ($bn) | Pre-tax profit (£m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.68 | 218 | 164 | 10.0 |
| 2012 | 1.75 | 239 | 182 | nil |
| % change | +4 | +10 | +11 | -100 |
£1=$1.59 | ||||
