Discounts hit margins at Signet

Signet Jewellers said underlying sales rose at both chains in its UK division in the 13 weeks to July 28, driven by strong trading in watches, branded jewellery and bridal goods.

But the UK’s largest jewellery firm said special offers and discounts knocked more than two percentage points off the division’s profit margins, pushing it into an operating loss of 300,000 US dollars (£189,900), compared to income of 2.8 million US dollars (£1.8m) the previous year.

The losses were smaller than the 3 million US dollars (£1.9m) it suffered in the previous quarter but its UK arm continued to lag behind its more buoyant US operations. And underlying sales in the UK were also on an improving trend – up 2.1 per cent, with its 194 Ernest Jones stores enjoying growth of 4.4 per cent, up from 0.6 per cent in the previous quarter.

However, this was partly offset by a slowdown to 0.1 per cent at its 328 H Samuel stores, from 1.8 per cent in the previous quarter.

The group closed eight H Samuel stores and six Ernest Jones stores over the past year, which hit its top-line UK sales, which were up 1.4 per cent to 152 million US dollars (£96.2m).

But it saw a much stronger performance from its 1,300 stores in the US, where underlying sales rose 8.2 per cent. That helped the group’s overall operating income rise 8.4 per cent to 110.9m US dollars (£70.2m) in the quarter.