View from City Road: Signet needs to make more than money

It is undoubtedly good news that Signet is once more making money from selling jewellery on British high streets. For shareholders, however, it doesn't make a great deal of difference except that it brings the long-awaited financial restructuring that much closer.

Even if it manages to offload its loss-making Salisburys chain - it would be rash to expect any deal to bring in much cash - profits from jewellery retailing will pale into insignificance compared with 145 per cent gearing. Arrears on the pounds 318m of preference shares are already at pounds 64m and rising by pounds 30m a year. Given a 1988- style consumer boom and about 10 years of grace, Signet might just about be able to trade its way out of the mess. Neither seems remotely likely.

The sub-text of the group's claim that an immediate restructuring would not be in the best interests of all shareholders is that a few more months - or, ideally, years - of profitable trading will give it a better chance of securing a respectable deal for ordinary shareholders. The question is, will the preference shareholders allow it enough grace?

While they cannot force a restructuring, they now have enough voting rights - about 29 per cent - to put real pressure on the group to come up with acceptable proposals.