Signet Warns of Soft Holiday Sales
November 28, 07
With group like-for-like sales decreasing about 7 percent in the
The warning has raised fears in the market that the current holiday season will be soft. The U.S., the main global market, is not alone. Signet reported a weakening in the UK as well.
This, coupled with increased economic uncertainty, led to the lowered profit target.
Third quarter sales by Signet totaled $678.7 million, rising 7.9 percent at constant exchange rates and 10 percent on a reported basis, according to unaudited results the company announced Tuesday.
Like-for-like sales for the group increased 3.2 percent. Pre-tax profit was $2.5 million compared to $8 million in the third quarter of 2006. Operating profit decreased to $7.5 million from $13.4 million in 2006.
Total
The company reported that in its Jared chain of stores, the Peerless Diamond is increasingly popular. There will be a further increase in Kay national television advertising during the holiday season, Jared will have national television advertising support on both network, and cable channels for the first time.
The company reported that “substantial increases” in diamond, gold and platinum costs over the past several years have not been fully passed on to consumers. Signet anticipates this will result in “realigning prices” in 2008, which is expected to start following Valentine’s Day.
In the UK, total sales were up 2.6 percent at constant exchange rates to $190.5 million. Like for like sales rose 4.8 percent. This resulted in an operating profit of $0.2 million. Sales of diamond jewelry were up slightly in the past nine months.
Signet’s net debt is $524.8 million, rising from $461.9 million at the end of October 2006.