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Zale is Signet's crowning glory

Owner of high-street chains H Samuel and Ernest Jones Signet Jewelers has stunned the market with strong half-year figures.
August 28, 2015

Shares in Signet Jewelers (SIG) - owner of UK high-street chains H Samuel and Ernest Jones - rose 14 per cent following a strong set of half-year numbers, thanks largely to last year's acquisition of the Zale Corporation. The new Zale division reported a 57 per cent improvement in second-quarter sales to $389m, albeit through an extra 26 trading days compared with the same period last year. This was more than enough to offset a 2.3 per cent sales decline across the UK division, pushing total group sales up 15 per cent to $1.41bn. Encouragingly, like-for-like sales increased by 4.2 per cent at the group level.

IC TIP: Hold at 8,728p

It seems Signet's UK brands were negatively affected by foreign exchange rates. At constant currency, total sales across the UK division rose 6.4 per cent following strong demand for diamond jewellery and watches, while like-for-like sales managed an improvement of more than 5 per cent.

Thanks to robust margins, second-quarter pre-tax profits came in at $89.7m, up from $69.8m in 2014. Excluding one-off costs (including a $34.2m legal settlement linked to the Zale acquisition) adjusted pre-tax profits hit $138m, giving EPS of $1.28, exceeding both Signet's and market analysts' projections.

SIGNET JEWELERS (SIG)
ORD PRICE:8,728pMARKET VALUE:£6.99bn
TOUCH:8,724-8,734p12-MONTH HIGH:9,460pLOW: 6,371p
DIVIDEND YIELD:0.6%PE RATIO:26
NET ASSET VALUE:3,586ȼ*NET DEBT:44%

Half-year to 30 JuneTurnover ($bn)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
20142.2821919336.0
20152.9425522744.0
% change+29+17+18+22

Ex-div: na**

Payment: na**

*Includes intangible assets of $955m or 1,193ȼ a share

**Second-quarter dividend of 22ȼ a share paid on 27 Aug. Third-quarter dividend of 22ȼ a share to be paid on 27 Nov with ex-div date of 29 Oct

£1=$1.54