Signet Group Plc, Britain’s biggest jewelry firm, said it was encouraged by an 18% rise in its first-half profits on Wednesday, which demonstrates its strong position in the British and U.S. markets, Reuters reported.
The retailer is increasing its market share in the United States, where the retail climate has improved over the past year and where its 1,000-plus stores contribute three quarters of group revenue, Reuters reported. In the UK, sales at its 600 stores are robust although a long anticipated slowdown in consumer spending has begun.
“Our businesses on both sides of the Atlantic are well positioned to compete and, while the important fourth quarter lies ahead, the board takes encouragement from the strong first half performance,” Group Chief Executive Terry Burman reportedly said.
Group pre-tax profits rose to 47.5 million pounds (U.S.$74.4 million) for the 26 weeks to August 3, up from 40.2 million (U.S.$62.9 million) the same time last year.
The result followed stronger than expected sales for the period, which were announced earlier this month.
Signet operates Kay Jewelers, Jared the Galleria of Jewelry and other regional names in the United States and sells jewelry, watches, and gifts through H Samuel, Ernest Jones and Leslie Davis shops in the UK.
Burman told reporters that the outlook in the United States, where the group has 7% of the highly fragmented market, remains uncertain, Reuters reported. In the UK, where the group has a 17% market share, he said the rate of growth was moderating but he was unsure whether it would slow further.
A few weeks ago the retailer showed its sales for the six-month period were up 7% on an underlying basis, up 6.7% in the U.S., and 7.7% in the UK.
In addition, Signet plans to use the successful Jared superstore format in the United States to double selling space there in the next 10 years, Reuters reported. Signet plans to have 67 Jared stores, five times the size of a normal store, by the year-end. The brand is already the eighth largest jewelry seller and Signet thinks it can grow to 200 shops by 2006.
Burman pointed out that the fastest growing age group in the United States is 45- to 64-year-olds, who spend more per head on jewelry than any other age group.
He is stepping up advertising and is soon to launch the group’s new Leo diamond, which he says has been independently certified to have a “brighter, lighter” sparkle. Diamonds contribute about 67% of U.S. sales.