RAPAPORT... Signet Jewelers reported that sales rose 7 percent year on year to $853.9 million for the second quarter that ended on July 28. Same-store sales climbed 7.1 percent, cost of sales increased 7.9 percent to $542.7 million and profit improved 6.6 percent to $70.7 million.
U.S. division sales rose 9.2 percent to $701.9 million and same-store sales were up 8.2 percent, while U.K. division sales improved 1.4 percent at a constant exchange-rate and comparable-store sales rose 2.1 percent. Same-store sales increased at all of the group's brand stores, which include Kay, Jared, H.Samuel and Ernest Jones.
In the second quarter, gross margin fell to 36.4 percent from 37 percent one year ago. Accounts receivable rose 13.8 percent to $1.03 billion, reflecting both higher sales and greater participation of in-house customer financing. Inventory rose 9.1 percent year on year to $1.3 billion, primarily the result of higher diamond and gold costs.
Mike Barnes, Signet's chief executive, said, ''We delivered strong second quarter results driven by a 12.5 percent increase in same-store sales at Kay and positive same-store sales in the U.K. This combined with expansion in operating margin drove a double digit increase in earnings per share.''
Signet anticipates same-store sales growth in the low to mid single-digit range for the third quarter. The full fiscal year includes one extra week for Signet, which is expected to increase sales by approximately $50 million; however, this will have a negative impact on the same-store sales calculation for the fourth quarter. This additional week is also expected to result in an operating loss of $2 million to $4 million, reflecting advertising expenses ahead of Valentine's Day next year.