City fails to share Signet optimism

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A relatively confident trading statement from Signet, the high street jewellery group, yesterday failed to calm City fears about the group's overall position. Signet said that pre-tax profits for the year to 28 January were likely to be up on las t year's, with sales for the first 11 months showing a 3 per cent increase on the same period in 1993. City analysts are now forecasting pre-tax profits of between £5m and £8m for the full year.

Christmas is a key time for Signet, accounting for 40 per cent of the group's sales. The company said trading in that period was also up 3 per cent. "Christmas came late in the UK but sales were strong when they finally came," James McAdam, chairman, said. Watches and collectibles such as crystal had performed well all year, he added.

The stores, which include the H Samuel and Ernest Jones chains, managed to avoid pre-Christmas discounts and Mr McAdam said the group had been trying to maintain margin improvements.

The UK proved a happier market than the US, where the jewellery sector has suffered a downturn since May. Signet blamed intensified competition and pressure on margins.

The 11-month period included a significant reorganisation of Signet's operations. These included the closure of the Ratners chain and the sale of Salisbury's, the loss-making handbag and luggage company. The 174 outlets were bought by Stephen Hinchliffe,a former chairman of the Sheffield engineering group James Wilkes. Signet now has 1,490 stores in the UK and the US, compared with 1,638 at the beginning of last year. It is refurbishing some of its H Samuel and Ernest Jones outlets.

Mr McAdam declined to comment on recent speculation that a refinancing of the business was inevitable. "We keep the situation under constant review and we have not considered that action appropriate yet," he said. Signet's banking arrangments run out in June.

Many analysts remain disappointed by Signet's performance. One said yesterday: "It is an enormous mess to sort out. There is no robust sales increase on either side of the Atlantic and this trading statement is certainly nothing to get euphoric about." The shares were unchanged at 22p.