LONDON, June 6 /PRNewswire-FirstCall/ -- Signet Group plc (LSE;
NYSE: SIG), the world's largest speciality retail jeweller, today
announced its first quarter results for the 13 weeks from 3
February to 3 May 2008. Group Total sales rose by 1.0% to $822.5
million (13 weeks to 5 May 2007: $814.4 million). Like for like
sales decreased by 2.5%. Group profit before tax was down by 24.0%
to $38.6 million (13 weeks to 5 May 2007: $50.8 million) and
operating profit fell 18.9% to $43.8 million (13 weeks to 5 May
2007: $54.0 million). Operating margin was 5.3% (13 weeks to 5 May
2007: 6.6%). The average US dollar rate was 1 pound Sterling/$1.98
(13 weeks to 5 May 2007: 1 pound Sterling/$1.96), see note 9 for
impact of exchange rate movement. The tax rate was 36.0% (13 weeks
to 5 May 2007: 36.0%). Basic earnings per share were 1.4 cents (13
weeks to 5 May 2007: 1.9 cents), equivalent to 14.4 cents per
American Depositary Share (13 weeks to 5 May 2007: 19.1 cents).
United States (circa 74% of Group annual sales) Total sales were
little changed at $631.1 million (Q1 2007/08: $632.3 million),
while like for like sales decreased by 4.7% reflecting a difficult
trading environment, partly offset by better weather over
Valentine's Day. While a tight control of costs was maintained,
operating profit was $45.5 million (13 weeks to 5 May 2007: $59.9
million) as a result of operational deleverage reflecting the
decline in like for like sales. Gross margin was up 50 basis
points, with price increases implemented after Valentine's Day and
in March offsetting higher commodity costs, greater promotional
activity and changes in sales mix. The objective of the price
increases is at least to maintain the full year gross margin
percentage at last year's level. Early results remain encouraging,
although a full evaluation will only be completed in the summer.
The operating margin was 7.2% (Q1 2007/08: 9.5%). The net bad debt
to total sales ratio was up by 70 basis points, however this was
largely offset by higher income associated with the receivables.
The level of net space growth in the US is now expected to be
between 4% and 5% as a result of the continuing application of the
Group's strict investment criteria. United Kingdom (circa 26% of
Group annual sales) Total sales were up by 4.0% at constant
exchange rates (see note 9); the reported increase was 5.1% to
$191.4 million (13 weeks to 5 May 2007: $182.1 million). Like for
like sales rose by 5.3%, with H.Samuel and Ernest Jones up by a
similar amount. Reflecting the like for like sales performance, and
continued good cost control, an operating profit of $2.7 million
was achieved compared with a $1.9 million loss in the comparable
period last year. The gross margin was up 40 basis points, with
selective price increases more than offsetting the increased cost
of gold and mix changes. To execute the Ernest Jones store
refurbishment programme more effectively over the medium term, it
has been decided to reduce the number of refits and relocations
scheduled for 2008/09 from 46 to about 35. Group Costs, Financing
Costs and Net Debt Group costs were $4.4 million (13 weeks to 5 May
2007: $4.0 million). Financing costs rose to $5.2 million (13 weeks
to 5 May 2007: $3.2 million) due to the higher level of year end
net debt. In the quarter net debt was little changed (Q1 2007/08:
increase of $53.0 million), with the level at 3 May 2008 being
$377.0 million (5 May 2007: $286.2 million). This reflected tight
control of working capital, lower tax payments and the absence of
any share repurchases (Q1 2007/08: $29.0 million purchase of
shares) which more than offset the lower operating profit. For
2008/09, a cash outflow at the bottom end of the $40 million to $80
million range indicated in the 2007/08 results statement is now
expected, before exchange adjustments and changes in equity, and
subject to general economic uncertainties. Primary listing and
domicile As was indicated in the 2007/08 results statement, the
Board believes that shareholders would, on balance, support a
recommendation regarding a potential move of the primary listing of
the Group to the US and a redomicile of the Company to Bermuda.
Good progress continues to be made in facilitating such a change
and the Board intends to bring forward a proposal for shareholders
to consider later this summer. Any such proposal would include the
intention to obtain a secondary listing of the shares on the London
Stock Exchange to coincide with the primary listing becoming
effective on the New York Stock Exchange. Comment Terry Burman,
Group Chief Executive, commented: "The US performance reflected a
continuing difficult trading environment with the decline in like
for like sales resulting in a lower operating margin despite a
tight control of costs. The results of the price increases
implemented in the US in February and March remain encouraging,
although a full evaluation will only be completed during the
summer. In a demanding marketplace the UK division had a good
performance, with the 5.3% like for like sales increase and a
little changed cost base resulting in an operating profit of $2.7
million compared to a loss of $1.9 million in the first quarter
last year. Given the increasing pressure on consumer expenditure in
the UK and demanding second quarter comparatives, like for like
growth is not expected to continue at this level." Enquiries: Terry
Burman, Group Chief Executive +44 (0) 20 7317 9700 Walker Boyd,
Group Finance Director +44 (0) 20 7317 9700 Jonathan Glass,
Brunswick +44 (0) 20 7404 5959 Wendel Verbeek, Brunswick +44 (0) 20
7404 5959 Signet operated 1,966 speciality retail jewellery stores
at 3 May 2008; these included 1,407 stores in the US, where the
Group trades as "Kay Jewelers", "Jared The Galleria Of Jewelry" and
under a number of regional names. At that date Signet operated 559
stores in the UK, where the Group trades as "H.Samuel", "Ernest
Jones" and "Leslie Davis". Further information on Signet is
available at http://www.signetgroupplc.com/. See also
http://www.kay.com/, http://www.jared.com/,
http://www.hsamuel.co.uk/ and http://www.ernestjones.co.uk/.
Investor Relations Programme Details Annual General Meeting The
Annual General Meeting will take place at 11.00 a.m. today. First
quarter results A conference call will take place for all
interested parties today at 2.00 p.m. (BST). European dial-in: +44
(0) 20 7138 0839 Confirmation code: 9865496 US dial-in: +1 718 354
1362 Confirmation code: 9865496 European replay until 12 June: +44
(0) 20 7806 1970 Access code: 9865496# US replay until 12 June: +1
718 354 1112 Access code: 9865496# Piper Jaffray 28th Annual
Consumer Conference in New York Signet will be presenting at the
Piper Jaffray Annual Consumer Conference taking place in New York
on Tuesday 10 June to Wednesday 11 June 2008. The presentation,
which will also be webcast on http://www.signetgroupplc.com/, will
be given by Walker Boyd, Group Finance Director, who will also be
available for one-on-one meetings. Second quarter sales The second
quarter sales performance for the 13 weeks ending 2 August 2008 is
expected to be announced on Thursday 7 August 2008. This release
includes statements which are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements, based upon management's beliefs as well as on
assumptions made by and data currently available to management,
appear in a number of places throughout this release and include
statements regarding, among other things, our results of operation,
financial condition, liquidity, prospects, growth, strategies and
the industry in which the Group operates. Our use of the words
"expects," "intends," "anticipates," "estimates," "may,"
"forecast," "objective," "plan" or "target," and other similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance and are subject to a number of risks and uncertainties,
including but not limited to general economic conditions, the
merchandising, pricing and inventory policies followed by the
Group, the reputation of the Group, the level of competition in the
jewellery sector, the price and availability of diamonds, gold and
other precious metals, seasonality of the Group's business and
financial market risk. For a discussion of these and other risks
and uncertainties which could cause actual results to differ
materially, see the "Risk and other factors" section of the
Company's 2007/08 Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission on May 9, 2008 and other filings
made by the Company with the Commission. Actual results may differ
materially from those anticipated in such forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied therein may not be
realised. The Company undertakes no obligation to update or revise
any forward-looking statements to reflect subsequent events or
circumstances. SIGNET GROUP plc Condensed consolidated income
statement (unaudited) for the 13 weeks ended 3 May 2008 13 weeks 13
weeks 52 weeks ended ended ended 3 May 5 May 2 February 2008 2007
2008 Notes $m $m $m Sales 2,9 822.5 814.4 3,665.3 Cost of sales
(770.7) (752.4) (3,264.8) Gross profit 51.8 62.0 400.5
Administrative expenses (37.4) (35.3) (158.0) Other operating
income 29.4 27.3 108.8 Operating profit 2,9 43.8 54.0 351.3 Finance
income 3 2.3 3.4 11.0 Finance expense 3 (7.5) (6.6) (28.8) Profit
before tax 9 38.6 50.8 333.5 Taxation 4 (13.9) (18.3) (118.3)
Profit for the financial period 24.7 32.5 215.2 Earnings per share
- basic - diluted 6 1.4c 1.9c 12.6c 1.4c 1.9c 12.6c All of the
above relate to continuing activities. Condensed consolidated
balance sheet (unaudited) at 3 May 2008 3 May 5 May 2 February 2008
2007 2008 Notes $m $m $m Assets Non-current assets Intangible
assets 52.6 49.3 52.6 Property, plant and equipment 503.8 486.1
502.4 Other receivables 40.5 33.8 34.8 Retirement benefit asset -
5.1 - Deferred tax assets 21.5 29.0 19.7 618.4 603.3 609.5 Current
assets Inventories 1,494.6 1,402.8 1,445.5 Trade and other
receivables 850.3 793.0 927.5 Cash and cash equivalents 29.2 105.0
41.7 2,374.1 2,300.8 2,414.7 Total assets 2,992.5 2,904.1 3,024.2
Liabilities Current liabilities Borrowings due in less than one
year (26.2) (11.2) (36.3) Trade and other payables (337.2) (329.2)
(357.5) Deferred income (115.8) (112.7) (125.3) Current tax (65.1)
(86.4) (79.5) (544.3) (539.5) (598.6) Non-current liabilities
Borrowings due in more than one year (380.0) (380.0) (380.0) Trade
and other payables (88.7) (77.5) (85.3) Deferred income (140.8)
(135.8) (139.0) Provisions (9.4) (10.0) (9.6) Retirement benefit
obligation (4.6) - (5.6) (623.5) (603.3) (619.5) Total liabilities
(1,167.8) (1,142.8) (1,218.1) Net assets 1,824.7 1,761.3 1,806.1
Equity Capital and reserves attributable to equity holders of the
Company Called up share capital 15.4 15.4 15.4 Share premium 8
140.2 135.5 140.2 Other reserves 8 235.2 235.2 235.2 Retained
earnings 8 1,433.9 1,375.2 1,415.3 Total equity 1,824.7 1,761.3
1,806.1 Condensed consolidated cash flow statement (unaudited) for
the 13 weeks ended 3 May 2008 13 weeks 13 weeks 52 weeks ended
ended ended 3 May 5 May 2 February 2008 2007 2008 $m $m $m Cash
flows from operating activities: Profit before tax 38.6 50.8 333.5
Adjustments for: Financing income (2.3) (3.4) (11.0) Finance
expense 7.5 6.6 28.8 Depreciation of property, plant and equipment
27.1 24.0 109.4 Amortisation of intangible assets 1.3 1.2 4.7
Share-based payment expense 1.8 2.0 0.4 Other non-cash movements
(3.9) (1.4) (1.5) Loss on disposal of property, plant and equipment
0.2 - 1.4 Operating cash flows before movement in working capital
70.3 79.8 465.7 Increase in inventories (48.7) (49.0) (96.8)
Decrease/(increase) in trade and other receivables 62.9 73.0 (60.7)
Decrease in payables and deferred income (37.4) (68.1) (13.5) Cash
generated from operations 47.1 35.7 294.7 Interest paid (1.0) (0.5)
(29.8) Taxation paid (25.8) (39.5) (128.5) Net cash from operating
activities 20.3 (4.3) 136.4 Investing activities: Interest received
1.7 3.4 6.3 Proceeds from sale of property, plant and equipment 1.0
- 1.0 Purchase of property, plant and equipment (25.1) (24.1)
(129.1) Purchase of intangible assets (1.3) (4.2) (11.3) Cash flows
from investing activities (23.7) (24.9) (133.1) Financing
activities: Dividends paid - - (123.9) Proceeds from issue of
shares - 3.2 6.0 Purchase of own shares - (29.0) (29.0)
(Decrease)/increase in borrowings due in less than one year (10.4)
6.5 31.1 Cash flows from financing activities (10.4) (19.3) (115.8)
Reconciliation of movement in cash and cash equivalents: Cash and
cash equivalents at beginning of period 41.7 152.3 152.3 Decrease
in cash and cash equivalents (13.8) (48.5) (112.5) Exchange
adjustments 1.3 1.2 1.9 Cash and cash equivalents at end of period
29.2 105.0 41.7 Reconciliation of cash flows to movement in net
debt:(1) Net debt at beginning of period (374.6) (233.2) (233.2)
Decrease in cash and cash equivalents (13.8) (48.5) (112.5)
Decrease/(increase) in borrowings falling due within one year 10.4
(6.5) (31.1) Exchange adjustments 1.0 2.0 2.2 Net debt at end of
period (377.0) (286.2) (374.6) (1) Net debt represents cash and
cash equivalents less borrowings due in less than one year and
borrowings due in more than one year. Condensed consolidated
statement of recognised income and expense (unaudited) for the 13
weeks ended 3 May 2008 13 weeks 13 weeks 52 weeks ended ended ended
3 May 5 May 2 February 2008 2007 2008 $m $m $m Exchange differences
on translation of foreign operations 2.7 5.3 (0.1) Effective
portion of changes in value of cash flow hedges (9.7) 3.3 14.1
Transfer to initial carrying value of inventory from cash flow
hedges (5.4) (1.6) (10.2) Actuarial gain on retirement benefit
scheme - - (15.0) Deferred tax on items recognised in equity 4.3
(0.5) 3.7 Net income recognised directly in equity (8.1) 6.5 (7.5)
Profit for the financial period 24.7 32.5 215.2 Total recognised
income and expense attributable to equity holders of the Company
16.6 39.0 207.7 Notes to the condensed consolidated financial
statements (unaudited) for the 13 weeks ended 3 May 2008 1. Basis
of preparation These interim financial statements have been
prepared applying the accounting policies that were applied in the
preparation of the Company's published consolidated financial
statements for the 52 week period ended 2 February 2008. These
interim financial statements are unaudited and do not constitute
statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The comparative figures for the 52 weeks ended
2 February 2008 are not the Company's statutory accounts for that
period. Those accounts have been reported on by the Company's
auditors and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The report of the
auditors was (i) unqualified, (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under Section 237(2) or Section 237(3) of the Companies
Act 1985. 2. Segment information 13 weeks 13 weeks 52 weeks ended
ended ended 3 May 5 May 2 February 2008 2007 2008 $m $m $m Sales by
origin and destination UK, Channel Islands & Republic of
Ireland 191.4 182.1 959.6 US 631.1 632.3 2,705.7 822.5 814.4
3,665.3 Operating profit/(loss) UK, Channel Islands & Republic
of Ireland - Trading 2.7 (1.9) 105.1 - Group function (4.4) (4.0)
(16.0) (1.7) (5.9) 89.1 US 45.5 59.9 262.2 43.8 54.0 351.3 The
Group's results derive from one business segment -- the retailing
of jewellery, watches and associated services. 3. Net financing
costs 13 weeks 13 weeks 52 weeks ended ended ended 3 May 5 May 2
February 2008 2007 2008 $m $m $m Interest receivable 1.7 2.4 6.2
Defined benefit pension scheme - expected return on scheme assets
4.4 4.2 18.3 - interest on pension liabilities (3.8) (3.2) (13.5)
Finance income 2.3 3.4 11.0 Finance expense (7.5) (6.6) (28.8)
(5.2) (3.2) (17.8) 4. Taxation The net taxation charge in the
income statement for the 13 weeks to 3 May 2008 has been based on
the anticipated effective taxation rate for the 52 weeks ending 31
January 2009. 5. Translation differences The exchange rates used in
these interim financial statements for the translation of UK pound
sterling transactions and balances into US dollars are as follows:
3 May 5 May 2 February 2008 2007 2008 Income statement (average
rate) 1.98 1.96 2.00 Balance sheet (closing rate) 1.98 1.99 1.97
The effect of restating the balance sheet at 5 May 2007 to the
exchange rates ruling at 3 May 2008 would increase net debt by $0.4
million to $286.6 million. Restating the income statement would
decrease the pre-tax profit for the 13 weeks ended 5 May 2007 by
$0.1 million to $50.7 million. 6. Earnings per share 13 weeks 13
weeks 52 weeks ended ended ended 3 May 5 May 2 February 2008 2007
2008 $m $m $m Profit attributable to shareholders 24.7 32.5 215.2
Weighted average number of shares in issue (million) 1,703.9
1,703.5 1,703.8 Dilutive effect of share options (million) 0.5 10.1
3.3 Diluted weighted average number of shares (million) 1,704.4
1,713.6 1,707.1 Earnings per share - basic 1.4c 1.9c 12.6c -
diluted 1.4c 1.9c 12.6c Earnings per ADS - basic 14.4c 19.1c 126.3c
- diluted 14.4c 19.0c 126.1c The number of ordinary and deferred
shares in issue at 3 May 2008 was 1,705,541,827 and 50,000
respectively (5 May 2007: 1,705,224,572 ordinary and 50,000
deferred shares, 2 February 2008: 1,705,510,466 ordinary and 50,000
deferred shares). 7. Seasonality The Group's business is highly
seasonal with a very significant proportion of its sales and
operating profit generated during its fourth quarter, which
includes the Christmas season. The Group expects to continue to
experience a seasonal fluctuation in sales and profit. 8. Share
premium and reserves 13 weeks ended 3 May 2008 Other reserves
Retained earnings Share Capital Special Purchase Hedg- Trans-
Retain- Total prem- redemp- reserv- of own ing lation ed ium tion
es shares reserve reserve earnings $m $m $m $m $m $m $m $m Balance
at 2 February 2008 140.2 0.4 234.8 (10.8) 8.2 10.0 1,407.9 1,790.7
Recognised income and expense: - profit for the financial period -
- - - - - 24.7 24.7 - cashflow hedges (net) - - - - (10.8) - -
(10.8) - translation differences - - - - - 2.7 - 2.7 Equity-settled
transactions - - - - - - 1.8 1.8 Realisation of revaluation reserve
- - - - - - 0.2 0.2 Balance at 3 May 2008 140.2 0.4 234.8 (10.8)
(2.6) 12.7 1,434.6 1,809.3 9. Impact of constant exchange rates The
Group has historically used constant exchange rates to compare
period-to-period changes in certain financial data. This is
referred to as 'at constant exchange rates' throughout this
release. The Group considers this a useful measure for analysing
and explaining changes and trends in the Group's results. The
impact of the re-calculation of sales, operating profit, profit
before tax and net debt at constant exchange rates, including a
reconciliation to the Group's GAAP results, is analysed below. 13
weeks 13 weeks Growth Impact At Growth at ended ended at of
constant constant 3 May 5 May actual exchange exchange exchange
2008 2007 exchange rate rates rates rates movement (non-GAAP)
(non-GAAP) $m $m % $m $m % Sales by origin and destination UK,
Channel Islands & Republic of Ireland 191.4 182.1 5.1 1.9 184.0
4.0 US 631.1 632.3 (0.2) - 632.3 (0.2) 822.5 814.4 1.0 1.9 816.3
0.8 Operating profit/(loss) UK, Channel Islands & Republic of
Ireland - Trading 2.7 (1.9) n/a - (1.9) n/a - Group function (4.4)
(4.0) (10.0) (0.1) (4.1) (7.3) (1.7) (5.9) 71.2 (0.1) (6.0) 71.7 US
45.5 59.9 (24.0) - 59.9 (24.0) 43.8 54.0 (18.9) (0.1) 53.9 (18.7)
Profit before tax 38.6 50.8 (24.0) (0.1) 50.7 (23.9) At 3 May 2008
3 May 5 May Impact of At constant 2008 2007 exchange rate exchange
rates movement (non-GAAP) $m $m $m $m Net debt (377.0) (286.2)
(0.4) (286.6) DATASOURCE: Signet Group plc CONTACT: Terry Burman,
Group Chief Executive, or Walker Boyd, Group Finance Director, both
of Signet Group plc, +44 (0) 20 7317 9700; or Jonathan Glass, or
Wendel Verbeek, both of Brunswick, +44 (0) 20 7404 5959 Web site:
http://www.signetgroupplc.com/ http://www.kay.com/
http://www.jared.com/ http://www.hsamuel.co.uk/
http://www.ernestjones.co.uk/
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