H Samuel owner Signet warns on profits after discounting hit margins

Despite posting a 5% group like-for-like sales rise over Christmas, Signet - which operates Ernest Jones and H Samuel in the UK – said margins were hit after it discounted to pull shoppers in.

Signet chief executive Mike Barnes said: “Additional discounting was necessary in a highly promotional retail environment that included challenging customer traffic trends and lower than anticipated commodity cost savings.  We believe these factors will result in lower than expected gross margins and profitability versus our original expectations.”

Signet reported UK like-for-likes up 5.2% driven in particular by Ernest Jones, where same store sales jumped 8% in the 8 weeks to December 28. Like-for-likes at H Samuel were up 3.3%.

Consolidated ecommerce sales increased 37.5% in the UK division.

In the US division like-for-likes were up 4.9%.

Barnes added: “We were pleased to deliver 5% same store sales for the Holiday Season and were especially encouraged by both the improvement in the UK division and the strength of our ecommerce sales across divisions. 

“The US Holiday Season was highlighted by a strong November and a strong finish to December.  Overall, we expect fourth quarter same store sales to be within our guidance.”