Signet, the largest specialty jewelry retailer in the U.S., with 8.2 percent market share, announced yesterday that total sales figures for 2005 increased 8.5 percent to £1,752.3 million ($3,073 million) from £1,615.5 million ($2,833 million) in 2004.

 

Profit for the year was £130.8 million ($229.4 million), down from £134.8 million ($236.4 million) in 2004. Once again the U.S. division compensated for poor results in the UK.

 

Total dollar sales increased by 12.1 percent, with like for like sales up 7.1 percent. Like for like sales increased by 2.4 percent over the group as a whole.

 

In the U.S., A virtual diamond vault, offering consumers access via an in-store computer to a supplier’s inventory of loose diamonds, was rolled out to all Jared stores and selected mall stores.

 

The average unit selling prices in both mall stores and Jared increased by some 8 percent, reflecting further positive response by the consumer to new, higher value, merchandising initiatives, as well as selective changes in retail prices due to increased commodity costs.

 

The upper end of the diamond selection was further enhanced and the Leo Diamond range was again expanded. In Jared the luxury watch ranges continued to be extended. During the year an initiative to develop the capability to source rough diamonds was commenced with the objective of securing additional reliable and consistent supplies of diamonds.

 

In the U.S., operating profit rose by 17.3 percent to £167.1 million ($293 million), compared to £142.4 million ($249.7 million).

 

Over the last five years the US division’s total dollar sales have grown at an annual compound rate of 9.7 percent and like for like sales by 4.7 percent. During the same period, the division’s share of the specialty jewelry market has risen from 5.8 percent to 8.2 percent.

 

In the UK, the company pointed to the sharpest deterioration in retail trading conditions for 14 years as a reason for the 8.2 percent decrease in like for like sales. Operating profit fell to £49.1 million ($86.1), compared to £76.9 million ($134.9 million) in 2004, which included a restructuring charge of £1.7 million $2.98 million).

 

Notwithstanding the difficult environment, the average transaction value increased by 5 percent and diamonds now account for 29 percent of the division’s sales, a percentage increase over the prior year. During the last five years the average transaction values have increased by 34 percent in H.Samuel and by 37 percent in Ernest Jones. Diamond participation has risen from 17 percent to 21 percent and from 33 percent to 38 percent respectively. The Forever Diamond selection was increased in H.Samuel, as was The Leo Diamond range in Ernest Jones.

 

Looking to the future, Terry Burman, Signet chief executive, said, "The group’s medium term objectives are to maintain leading performance standards on both sides of the Atlantic, to increase new store space in the U.S., and to maintain a strong balance sheet whilst funding expansion of space in the U.S. and dividend payments."

 

In the year to date, U.S. like for like sales have increased at a similar rate to that achieved in the year to 28 January 2006. The gross margin eased reflecting the expansion of Jared, product mix changes and higher commodity costs. In the UK, the like for like sales decline during the nine week period reduced to low single digits. Valentine’s Day promotions and a stronger performance by the insurance replacement business resulted in some reduction in gross margin.

 

Malcom Williamson has been appointed Chairman with effect from June 6, following the stepping down of James McAdam CBE, Chairman of Signet since 1992.