Signet to reduce inventory and close stores in the UK

Signet is planning to close stores and reduce inventory to combat falling UK sales as it posts negative full-year results. The retail group’s full-year UK like-for-like sales fell 3.3% for the 52 weeks to January 31.

The retailer’s results were hampered by a poor fourth quarter in which sales dropped 9.2%, after a rise of 0.8% in the first nine months of the fiscal year. H Samuel fared better than Ernest Jones, with like-for-likes for the year down 2.6% versus a drop of 4%.

In 2009 Signet is planning to reduce its investment in inventory in the UK by $15m (£10.3m) to reflect lower sales projections. The retailer is also planning to close some stores, but said that the number of closures will be lower than in 2008. 

The average UK unit selling price rose 9% for the year across the group’s portfolio, but shoppers reined in spending in the final quarter with the average price registering a rise of 4% compared with a rise of 12% in the first nine months.

UK watch sales at Signet outperformed projections with prestige ranges in Ernest Jones selling particularly well. Key volume lines were increased and also steadily. 

Total group like-for-like sales, which include Signet’s US arm, fell 8.2% in the period and have led to the launch of a $200m (£138.4m) net debt reduction plan. The group said that it is striving to enhance its position as the “strongest middle market speciality retail jeweller”.

Signet group chief executive Terry Burman said: 'As sector rationalisation continues at an accelerated pace, proven management, a strong balance sheet and sustainable competitive advantages are important considerations in relationships with staff, suppliers and landlords. As we enter fiscal 2010, our prime objective is to strengthen further the group’s industry-leading position so as to be able to benefit from the reduced capacity within the specialty jewelry sector and to be well positioned for the eventual consumer recovery.”

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