Signet slumps on trading gloom

Shares in Signet, the troubled former Ratners business, slumped a further 7 per cent in a buoyant market yesterday after the company announced poor trading in the UK and the US.

The shares finished 1p lower at 12.5p when the company said the downturn in the US jewellery sector had continued and trading on British high streets had been damaged by heavy discounting in the clothing sector, which had dragged discretionary spending away from jewellery.

Like-for-like sales in the UK stores, which include the H Samuel and Ernest Jones chains, was up 0.4 per cent over the last five months, which was worse than expected. Comparable sales in the Sterling business in the US have slumped by 1.9 per cent.

The company has taken action to reduce costs in the US, including 350 redundancies in May.

Signet also announced pre-tax profits of pounds 8m for the year to January, compared with an pounds 85m loss in the previous year. Sales were down from pounds 933m to pounds 899 due to store closures.

Operating profits were up from pounds 7m to pounds 14m though the figures were marred by the pounds 6.3m of costs associated with the disposal of the Salisbury luggage chain last August.

James McAdam, chairman, said that considerable progress had been made in putting the business on a stable footing. In the past three years the company had sold non-core subsidiaries such as Salisbury to the Facia group and Watches of Switzerland to Asprey, while reducing costs and closing 440 stores.

The group announced a two-year extension to its banking facilities last week, clearing the way for a long-awaited revision of its complicated share structure. Current net debt is pounds 333m and the company has outstanding dividend arrears of more than pounds 90m.

Disgruntled preference shareholders, who tried to force a break-up of the group last month, have threatened to repeat their challenge unless news on a reconstruction is announced soon. Mr McAdam said: "We have nothing to report on the reconstruction."