Signet Jewellers has reported a higher-than-expected quarterly profit as US shoppers flocked to both its mid-tier Kay Jewelers and upscale Jared chains despite higher prices.In the United States, where Signet gets 80 per cent of its sales, the company was able to raise prices, allowing it to more than compensate for higher costs of the gold and silver that goes into its jewelry. Gold prices recently hit an all-time high.
Signet’s US customers of more modest means and as well as its upper middle-class shoppers bought necklaces, bracelets and diamond and gold rings in greater numbers during a period that includes the Mother’s Day and bridal seasons, which are second in sales only to the end-of-year holidays for jewelers.Chief Executive Mike Barnes said on a call with analysts that many shoppers had traded up to fancier, pricier items. At Kay, which generates half of the company’s overall business, same-store sales were up 13.5 per cent.
At Jared, which competes with Tiffany & Co and where the average item was priced at $834 compared to $391 at Kay, comparable sales rose 12.6 per cent.
During the recession, Signet won market share from rivals such as Zale Corp thanks to better finances that reassured suppliers and aggressive marketing campaigns, and many Wall Street analysts expect Signet to keep outpacing rivals.
“We expect Signet to gain additional share as it cements its position as the leading consolidator in a highly fragmented and weakened industry,” Lazard Capital Markets analyst Jennifer Davis said in a note on Thursday.Overall, sales at stores open at least a year rose 12.2 per cent in the United States. In Britain, where Signet gets the remaining 20 per cent of its sales, same-store sales rose for a second consecutive quarter, increasing 1.4 per cent, despite austerity measures that have hurt British consumer spending. Overall company sales during the second quarter, ended July 30, rose 10.8 per cent to $797.6 million.
Signet reported net income of $66.3 million, or 76 cents per share, up 71.3 per cent from $38.7 million, or 45 cents per share, a year earlier. That was above the profit 59 cents per share on sales of $768.8 million Wall Street analysts were expecting.
From / Gulf Today