Fashion & prestige watches drive Signet’s Q3 sales

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Signet Jewelers Limited has announced its sales and earnings for Q3, ending October 29, with sales in the UK falling 4.7% in the third quarter compared to the same period last year, but watches highlighted as driving sales.

Total operating income was up 23.5% to $52.5 million (£32.9m), while, in Q3, Signet’s global same store sales were up 1.4% compared to an increase of 10.6%. Total sales were $716.2m compared to $710.5m in the third quarter of fiscal 2012, up $5.7m or 0.8%. e-commerce sales were $19.6m compared to $14.5m in the third quarter of fiscal 2012, up 35.2%.

Signet, which operates H Samuel, Ernest Jones and Leslie Davis stores in the UK, outlined sales totalling $140.6m (£88.3m) compared to $147.5m (£92.6m) in the third quarter of fiscal 2012, down $6.9m (£4.3m) or 4.7%.

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Its same-store sales increased 2.3% compared to a decrease of 0.5% in the third quarter, with Signet naming the primary driver as strong performance in prestige and fashion watch sales. Brands stocked across Signet’s UK stores include Breitling, Omega and Rado, as well as Ice-Watch, Seiko and Rotary.

Ernest Jones has also recently launched a new watch brand in store, Project D, a collection designed by Dannii Minogue.

H Samuel sales totaled $74.1m (£46.5m) in Q3, while Ernest Jones and Leslie Davis’ combined sales totaled $66.5m (£41.7m), up 3.6% compared to Q3 last year.

In the UK division, the operating loss was $5.5m (£3.4m) or 3.9% of sales compared to an operating loss of $5.0 million or 3.4% of sales in the third quarter of fiscal 2012.

Gross margin dollars in the UK decreased $2.3m (£1.44m) compared to the third quarter of fiscal 2012, reflecting a gross margin rate decline of 30 basis points. The decrease in rate was a result of a decline in gross merchandise margin of 130 basis points, which Signet says was caused primarily by customers’ preferences for promotional merchandise. Partially offsetting the decline were favourable store occupancy expenses due to store closures and negotiated rent reductions.

Mike Barnes, chief executive of Signet, thanked everyone working for Signet for helping to deliver high earnings. He also highlighted the effect of the resent superstorm Sandy in the US.

“We delivered another quarter of record earnings per share due to strong execution of our strategies by our team. I would like to thank all at Signet who contributed to these results.

“Turning to the fourth quarter, our thoughts are with all those impacted by superstorm Sandy, and we wish everyone affected a return to normalcy as quickly as possible. The storm created some initial disruption and November thus far has been challenging. With the majority of sales ahead of us, we are well-prepared for the holiday season with exciting new merchandise, terrific marketing, and our talented well-trained sales associates ready to provide customers a great shopping experience.”

Barned added that Signet will focused to build profitable market share, having recently completed the acquisition of Ultra Stores, Inc., a jewellery retailer operating primarily in outlet malls in the States, many of which it will transform into Kay Outlets.

At the close of Q3, Signet was operating 326 H Samuel stores in the UK, and 194 Ernest Jones stores. It has closed 12 H Samuel stores and four Ernest Jones locations in the past year.

Looking ahead, Signet’s current expectations for fourth quarter same store sales are low single-digit on a 53-week basis and low-to-mid single-digits on a 52-week basis.

Valentine’s day is set to feature a large-scale promotional campaign, while – in terms of stores – Signet plans to close a further nine H Samuel locations and four Ernest Jones stores in the next quarter.
 

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