Signet Jewelers Ltd, owner of H Samuel, Ernest Jones and Leslie Davis stores in the UK, has announced its financial results for Q1 fiscal 2015, with an increase in UK sales of 12.4% leading the way for the international group.
The company has had an upbeat start to the fiscal year, with chief executive officer Mike Barnes describing Q1 as "very strong", with positive momentum in the UK driven by a notable increase in online sales. In total group sales climbed 6.3%.
Q1 UK Results
Overall, Signet’s UK division won total sales of US$151.7 million (£89.9m), up $16.7 million or 12.4% compared to Q1 fiscal 2014. UK same-store sales increased 4.1% compared to a decrease of 2.3% in the first quarter fiscal 2014.
The company cited fashion watches, bridal brands and fashion jewellery as the main areas boosting sales. Sales of fashion watches in Ernest Jones were particularly strong. The average merchandise transaction value declined primarily driven by sales mix.
In total, H Samuel same-store sales climbed 3.3% compared to Q1 fiscal 2014, totalling $78.8 million (£46.7m). Ernest Jones same-store sales (including Leslie Davis stores), totalled $72.9 million (£43.2m), up 5.0% for the quarter.
Signet’s UK e-commerce sales hit $7.8 million (£4.6m) compared to $5.5 million in first quarter fiscal 2014, up $2.3 million or 41.8%.
Q1 Group Results
In terms of overall group sales, Signet’s same-store sales up 3.3 %, with operating income totalling $150.7 million (£89.3m), up 5.5 % compared to the same period last year. The group’s operating income, excluding acquisition related costs, was $159.1 million (£94.3m), up 11.4 %. Overall sales for the period hit $1.06 billion (£625m).
Signet chief operating officer Mike Barnes said of the Q1 results: "We delivered a very strong first quarter with increases of 6.3% in total sales, 3.3% in same-store sales and 14.2% in adjusted EPS. Positive momentum at our UK division continued with same-store sales of 4.1% and a significant improvement in profitability.
"[The] US division same-store sales increased 3.2%, with a solid performance by both Kay and Jared. We were very pleased with our quarterly results, which were driven by the excellent execution of our associates and resilient customers who shopped our great merchandise offerings. I would like to thank all Signet associates for their contributions to these results."
Barnes added that the company was very pleased with its performance in the first few weeks of May, with Mother’s Day in the US helping to win sales.
"Customers have responded favourably to our new products and fresh collections, particularly in fashion jewellery. While we expect to end the quarter with mid-single digit comps, our performance in the second quarter to date has actually been higher than that including a strong Mother’s Day. Our team’s consistent ability to execute our initiatives by focusing on our competitive strengths leaves us well-positioned to achieve our objectives this year."
Looking ahead to Q2 of fiscal 2015, Signet anticipates second quarter comparable store sales to increase by 3% to 5%.
On May 29, Zale shareholders will vote on Signet’s proposed acquisition. A statement from Signet said "We believe our offer provides compelling and immediate value to Zale stockholders while eliminating business execution risk. We encourage all Zale stockholders to support the transaction."
The company today said it has reiterated its commitment to the transaction at the agreed upon $21.00 per share purchase price. Barnes said: "We believe the merger consideration reflects the full and fair value for Zale common stock based on our extensive due diligence on the company and our detailed understanding of the risks and challenges associated with, and additional substantial investment required for, Zale to continue to deliver improved results relative to its history both in the near and long term. We continue to urge all Zale stockholders to vote in favour of the transaction at the Zale special meeting of stockholders on May 29, 2014."