Signet Ends Year with a Net Loss of $393.7 Million

Jewelry retailer Signet posted on Wednesday a pre-tax loss of $326.5 million, for the year ended January 31. Group total sales: $3.344 billion, declining 5.7 percent at constant exchange rates while same store sales fell 8.2 percent.

Signet, the world’s largest specialty jewelry retailer, posted a net loss of $393.7 million, after ending the previous year with a $219.8 million net income. The retailer reported a goodwill impairment charge of $516.9 million. Excluding the impairment to goodwill and relisting costs, net income for fiscal 2009 was $133.7 million.

Fourth quarter losses totaled $424 million, compared to $143 million income generated the year before.

Following the results, and in the light of the financial market conditions, as well a focus on debt reduction, Signet’s board decided it is not “appropriate” to pay dividends.

CEO Terry Burman said Signet’s prime objective is to strengthen the group’s leading position to be able to benefit from the reduced capacity within the specialty jewelry sector. “To reinforce our position, we also aim to reduce net debt by around $200 million in fiscal 2010,” Burman added.

U.S. division total sales were $2.536 billion, declining from $2.706 billion in the year before, and same store sales declined 9.7 percent. Sales performance was primarily driven by the difficult economic conditions with same store sales falling in the fourth quarter by 16.1 percent. The U.S. represents about 76 percent of group sales.

Spending by higher income consumers was particularly weak in the fourth quarter, and this was reflected in the performance of Jared.

In the UK, sales decreased by 3.8 percent at constant exchange rates to $808.2 million from $959.6 million. Same store sales decreased by 3.3 percent (H.Samuel down by 2.6% and Ernest Jones down by 4.0%).

The coming fiscal year, Signet is embarking on a $100 million U.S. cost reduction program, planning a “significant” working capital reduction.