LONDON (Alliance News) - Signet Jewelers Ltd Thursday said sales in the second quarter were driven by strong trading in the UK and US, both online and in-store, as well as a sales boost from its recent acquisition of US-based speciality fine jeweler Zale Corp.
The group said it expects same-store sales to grow between 2% and 4% in the third quarter, and gave earnings per share guidance of between USD4.47 and USD4.71 for the current full financial year. In the financial year ended February 1, diluted earnings per share was USD4.56.
Signet Jewelers said total sales in the 13 weeks to August 2 were up 39% on a reported basis to USD1.22 billion from USD880.2 million last year, boosted by the addition of the Zale division, which it said added USD247.5 million of sales to the second quarter. Same store sales were up 4.8%, and up 6.3% on an organic basis.
Its operating income on a reported basis was down 21% to USD83.5 million, hit by accounting adjustments, severance costs and transaction costs associated with the acquisition of Zale Corp.
However its organic income - which exclude transaction, severance, capital structure and financing items, as well as the Zale operations - was up almost 18% at USD124.1 million.
"Positive momentum at our UK division continued with our best quarterly same store sales increase in seven years, at 4.4%, and our best operating margin in five years. Same store sales at our sterling jewelers division, which includes Kay and Jared, increased 6.7% and delivered strong operating results," said Chief Executive Mike Barnes in a statement.
The specialty retailer operates Kay Jewelers and Jared in the US, H. Samuel and Ernest Jones in the UK, and now has the Zale division, after buying the US retailer for USD1.4 billion in cash earlier this year.
Signet said it has begun the integration process of Zale, and now expects more cost savings than originally expected.
"We believe three-year synergy opportunities will be USD150 million to USD175 million, up from our previous expectation of USD100 million," said Barnes.
Signet said it expects to spend between USD240 million and USD260 million in capital expenditure on new Kay and Jared stores, store remodels, and roughly USD55 million directed to the Zale division for IT infrastructure and stores.
Signet shares were up 3.2% at 6,769.00 pence per share Thursday afternoon.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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