10th Jan 2008 12:30
Signet Group PLC10 January 2008 Signet Group plc (LSE: SIG and NYSE: SIG) Embargoed until 12.30 p.m. (GMT) 10 January 2008 CHRISTMAS TRADING STATEMENT Like for like sales 8 weeks to 29 December 2007 Group down 6.8% US down 8.1% UK down 3.1% Like for like sales 47 weeks to 29 December 2007 Group down 0.2% US down 1.0% UK up 1.8% Terry Burman, Group Chief Executive, commented: "In a very challenging consumerenvironment on both sides of the Atlantic, Group like for like sales were down6.8% over the eight week period. Profit before tax for 2007/08 is currentlyexpected to be between $330 million and $340 million. Against the background ofmore difficult economic conditions, the Group's strong balance sheet, superioroperating metrics and sector leading execution are vital medium and long termcompetitive advantages." "In the US, the like for like sales performance over the Holiday season wasclearly disappointing. We remain focused on implementing our proven strategy andon gaining profitable market share." "In the UK, while like for like sales declined in the Christmas period they areahead for the year to date reflecting improved execution in a difficult market.Further enhancements to the basic retail disciplines are planned for 2008,including the initial roll out of the new Ernest Jones store design." "The consistent growth in the holding of US beneficial shareholders hasmeaningfully accelerated in recent weeks and as a result Signet may soon becomea domestic issuer for SEC purposes. The Signet Board has kept under close reviewthe most appropriate domicile and stock market listing for its shareholders as awhole. In light of the recent changes in the shareholder base of the Company,the Board will further consider these matters, including seeking the views ofits shareholders. There is no certainty as to the outcome of this assessment,even in the event of Signet becoming a domestic issuer." Enquiries: Terry Burman, Group Chief Executive +44 (0) 20 7317 9700 Walker Boyd, Group Finance Director +44 (0) 20 7317 9700 Tom Buchanan, Brunswick +44 (0) 20 7404 5959 Wendel Verbeek, Brunswick +44 (0) 20 7404 5959 Signet operated 1,971 speciality retail jewellery stores at 29 December 2007;these included 1,402 stores in the US, where the Group trades as "Kay Jewelers","Jared The Galleria Of Jewelry" and under a number of regional names. At thesame date Signet also operated 569 stores in the UK, where the Group trades as"H.Samuel", "Ernest Jones" and "Leslie Davis". Further information on Signet isavailable at www.signetgroupplc.com. See also www.kay.com, www.jared.com,www.hsamuel.co.uk and www.ernestjones.co.uk. GROUP In the eight week period to 29 December 2007 like for like sales were down by6.8%. Total sales fell by 3.7% at constant exchange rates (see note 1) and by2.8% on a reported basis. In the 47 weeks to 29 December 2007 like for like sales declined by 0.2%. Totalsales increased by 3.7% at constant exchange rates (see note 1) and by 5.6% on areported basis. Profit before tax for 2007/08 is currently expected to bebetween $330 million and $340 million. The Group's operating margin is expectedto be between 9% and 10%, with a Return on Capital Employed of about 18%. TheGroup's cash flow for the full year, reflecting an investment in new space ofapproximately $200 million, is expected to show an outflow of about $150 millionbefore any changes in equity share capital. The balance sheet remains strong. UNITED STATES (circa 74% of Group annual sales) In the eight week period to 29 December 2007, US like for like sales declined by8.1% and total sales fell by 3.6%. The average selling price marginallyincreased in both Jared and the mall brand stores. Pricing discipline wasgenerally maintained, although in response to competition, additionalpromotional activity within the Journey product category had some adverse impacton gross margin. Overall the decline in gross margin, including the impact ofcommodity cost increases, is likely to be in line with expectations. In the 47 weeks to 29 December 2007, like for like sales decreased by 1.0%, withtotal sales up by 4.8%. Net new store space is expected to have increased by 10%during 2007/08. Bad debts as a percentage of credit sales for the year isanticipated to be at the high end of the range of the last 10 years, reflectingthe weak sales in the fourth quarter rather than a material deterioration in theperformance of the credit portfolio. Although the divisional operating profitfor 2007/08 is expected to be below that of last year, the operating margin isanticipated to be close to 10%, well above the typical level of the US jewellerysector. UNITED KINGDOM (circa 26% of Group annual sales) In the eight week period to 29 December 2007, UK like for like sales declined by3.1%, with total sales down by 3.8% at constant exchange rates (see note 1) andby 0.3% on a reported basis. The average selling price was up in both H.Samueland Ernest Jones. Watches continued to outperform but the diamond categoryperformance in Ernest Jones was disappointing. In a retail marketplace that washighly promotional, pricing discipline was maintained and the gross margin isanticipated to be in line with last year's level. In the 47 weeks to 29 December 2007, like for like sales rose by 1.8%. Totalsales at constant exchange rates increased by 0.7% (see note 1) and by 7.7% on areported basis. Divisional operating profit is forecast to be broadly in linewith last year's level on a 52 week basis; and the business continues to achievea healthy operating margin, a good return on capital and strong cash flow. The breakdown of UK like for like sales performance is shown below: Period Ernest Jones H.Samuel UK (c. 12% of (c. 14% of (c. 26% of Group) Group) Group)8 weeks to 29 December 2007 -4.4% -2.0% -3.1%------------------------------------------------------------------------47 weeks to 29 December 2007 +2.6% +1.2% +1.8%------------------------------------------------------------------------ Foreign Private Issuer Status The consistent growth in the holdings of US beneficial shareholders hasmeaningfully accelerated in recent weeks. As a consequence the proportion ofvoting securities held by US residents in mid-December was just below 50%compared to approximately 38% in October 2007. If this percentage were to rise to above 50%, as monitored on a quarterly basis,Signet would no longer satisfy the definition of a "foreign private issuer"under the rules and regulations of the US Securities and Exchange Commission(SEC) and would become a domestic issuer for SEC purposes. In the event of becoming a domestic issuer, Signet would work diligently to meetadditional US reporting and accounting obligations. Signet also would continueto file financial statements in the UK under International Financial ReportingStandards and to meet the obligations of a public listed company on the LondonStock Exchange. The Signet Board has kept under close review the most appropriate domicile andstock market listing for its shareholders as a whole. In light of the recentchanges in the shareholder base of the Company, the Board will further considerthese matters, including seeking the views of its shareholders. There is nocertainty as to the outcome of this assessment, even in the event of Signetbecoming a domestic issuer. INVESTOR RELATIONS PROGRAMME DETAILS There will be a conference call for all interested parties today at 2.00 p.m.GMT (9.00 a.m. EST and 6.00 a.m. Pacific Time) and a simultaneous audio webcastat www.signetgroupplc.com. To help ensure the conference call begins in a timelymanner, could all participants please dial in 5 to 10 minutes prior to thescheduled start time. The call details are: European dial-in: +44 (0) 20 7138 0818 European 48hr. replay: +44 (0) 20 7806 1970 Pass code: 4880615# US dial-in: +1 718 354 1171 US 48hr. replay: +1 718 354 1112 Pass code: 4880615# Fourth Quarter Sales Fourth quarter sales figures are expected to be announced on 7 February 2008. Note 1 - Impact of constant exchange rates The Group has historically used constant exchange rates to compareperiod-to-period changes in certain financial data. This is referred to as 'atconstant exchange rates' throughout this release. The Group considers this to bea useful measure for analysing and explaining changes and trends in the Group'sresults. The impact of the re-calculation of sales growth at constant exchangerates is shown below: 8 weeks to 29 December 2007 Growth at Impact of Growth at actual exchange exchange rate constant movement exchange rates rates (non-GAAP)-------------------------------------------------------------------------------- % % %--------------------------------------------------------------------------------Sales by origin and destination UK, ChannelIslands &Republic ofIreland (0.3) (3.5) (3.8) US (3.6) - (3.6)-------------------------------------------------------------------------------- (2.8) (0.9) (3.7)-------------------------------------------------------------------------------- 47 weeks to 29 December 2007 Growth at Impact of Growth at actual exchange exchange rate constant movement exchange rates rates (non-GAAP)-------------------------------------------------------------------------------- % % %--------------------------------------------------------------------------------Sales by origin and destinationUK, ChannelIslands &Republic ofIreland 7.7 (7.0) 0.7US 4.8 - 4.8-------------------------------------------------------------------------------- 5.6 (1.9) 3.7-------------------------------------------------------------------------------- This release includes statements which are forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995. Thesestatements, based upon management's beliefs as well as on assumptions made byand data currently available to management, appear in a number of placesthroughout 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 toidentify forward-looking statements. These forward-looking statements are notguarantees of future performance and are subject to a number of risks anduncertainties, including but not limited to general economic conditions, themerchandising, pricing and inventory policies followed by the Group, thereputation of the Group, the level of competition in the jewellery sector, theprice and availability of diamonds, gold and other precious metals, seasonalityof the Group's business and financial market risk. For a discussion of these and other risks and uncertainties which could causeactual results to differ materially, see the "Risk and Other Factors" section ofthe Company's 2006/07 Annual Report on Form 20-F filed with the U.S. Securitiesand Exchange Commission on May 4, 2007 and other filings made by the Companywith the Commission. Actual results may differ materially from those anticipatedin such forward-looking statements even if experience or future changes make itclear that any projected results expressed or implied therein may not berealised. The Company undertakes no obligation to update or revise anyforward-looking statements to reflect subsequent events or circumstances. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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