Signet's problems are still huge

Whichever clever corporate image-maker dreamt up the name Signet for the former Ratners jewellery business ought to be ashamed of himself. On current performance the business has about as much chance of turning into a swan (yes, we do know a young swan is spelt cygnet) as Gerald Ratner has of being re-appointed chief executive.

Try as he did, Mr Ratner's successor, James McAdam, could not make yesterday's results sound promising. True, the company has edged into profit after a thumping loss last time. And true, costs have been cut thanks largely to more than 400 shop closures, including most of the Ratners chain.

But there are still huge problems. The US business, which accounts for 60 per cent of the group's sales, has been struggling against a sharp decline in the American jewellery business. Now sales in the UK are also falling. Added to this is the group's horrible financial position. Saddled with pounds 330m of debt and more than pounds 90m of unpaid dividend arrears, Signet is having to paddle like crazy just to stand still.

Signet is left with two possibilities. One is to carry on trying to trade out of difficulty. Barring a 1980s style retail boom, which seems about as likely as a month of Sundays, this is a mug's game. Signet's other option is to wait for the most opportune moment to sell all or part of its business. Even this would achieve little more than settling the bank debt and unpaid dividends, however. Investors, who have seen a near pounds 1bn company reduced to a pounds 30m tiddler, would be left with only a few pence per share. Not a very appetising choice.