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Thursday, May 24, 2012

Signet Jewelers Sales Up 1.4%; Comps Up 1.2%; Calendar Shift Affects Sales


Signet Jewelers Ltd., the largest specialty retail jeweler in the U.S. and U.K., said Thursday that sales for the first quarter increased 1.4 percent to $900 million. Same store sales for the period, ended April 28, increased 1.2 percent. The company said a calendar shift due to a late Mother’s Day adversely impacted sales by an estimated $32 million or 370 basis points.

The Bermuda-based company reported that income before taxes rose 9.1 percent to $128.5 million and diluted earnings per share increased 10.3 percent to $0.96.

“We anticipated the impact of the Mother’s Day promotional calendar shift and managed our business accordingly,” said Mike Barnes, Signet CEO. “In the second quarter to date, which benefited from the calendar shift, our same store sales, including Mother’s Day, were up strong double-digits.”

The retailer said it provided guidance in the second quarter “due to the complexity of the calendar shift.” It expects same store sales in the second quarter to high single digit range and fully diluted earnings per share are expected to range from $0.78 - $0.84 based on an estimated 84 million weighted average shares outstanding.

In the company’s U.S. division, (which generally accounts for about 80 percent of the company’s total sales) sales increased 1.8 percent to $751.5 million. Same store sales were up 1.2 percent and were impacted by 440 basis points due to the calendar shift. Signet’s brands in the U.S. include Kay and Jared jewelry stores and several regional brands.

In the UK division, sales declined 0.8 percent to $148.5 million. Same store sales were up 1.2 percent (13 weeks ended April 30, 2011: 0.2%). Signet’s brands in the U.K. include H.Samuel and Ernest Jones.

Other financial highlights for the first quarter include:

* The gross margin was $353.7 million, representing 39.3 percent of sales.

* Gross margin in the U.S. increased $5.8 million compared to the first quarter of the prior year, driven by a favorable gross merchandise margin movement of 40 basis points, leverage on store occupancy expenses and increased income from credit related fees, partially offset by an impact of $4.7 million on the U.S. net bad debt expense, due to a change in the number of credit billing cycles included in the quarter.

* Gross margin in the UK was $1.8 million lower than that of the first quarter of the prior year, primarily as a result of an unfavorable foreign currency impact and a decline in gross merchandise margin of 170 basis points attributed to the level of promotional activity and merchandise mix, which were partially offset by lower store occupancy and store operating expenses.

* Selling, general and administrative expenses were $264.5 million, or 29.4 percent of sales.

* Other operating income, net, increased to $40.2 million, or 4.5 percent of sales.

* Net operating income was $129.4 million, up $10.7 million or 9 percent.

* In the US division, net operating income was $137.7 million, up $11.5 million or 9.1 percent.

* In the UK division, net operating loss was $3 million, up $2.8 million.

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