Signet shares fall with muted forecast

The Associated Press

Signet Jewelers Ltd.'s said Thursday that its fourth-quarter profit jumped nearly 50 percent as sales rose at its U.S. stores, but it issued a weak forecast, saying sales trends in the U.K. are weak, and its shares fell sharply.

Signet, which runs chains including Kay Jewelers and H. Samuel, said it earned $156.6 million, or $1.79 per share, for the quarter that ended Jan. 28. That's up from $105.4 million, or $1.21 per share, a year earlier. Analysts on average forecast $1.77 per share, according to FactSet.

Revenue rose 7 percent to $1.35 billion on price increases and new merchandise. Analysts had forecast revenue of $1.36 billion.

The company said its fourth-quarter revenue from its stores open at least a year increased nearly 7 percent from a year earlier. This comparison is key for retailers because it excludes the impact of stores that recently opened or closed. In the U.S., the figure rose 8.3 percent, but in the U.K. it rose only 1.7 percent.

For the year, the company reported net income of $324 million, or $3.73. That was up 62 percent from $200 million, or $2.32, the previous year, as Signet's net interest expense fell and its revenue rose faster than its other costs. Signet's revenue rose 9 percent to $3.75 billion.

Signet said that the U.K.'s tough economy is taking a toll on consumers and it doesn't expect that to improve any time soon. As a result, the company expects its revenue from stores open at least year to be up in the low single digits for the current quarter, which is a bad sign for the retailer. The company said it was pleased with its Valentine's Day sales but it expects some of its Mother's day sales to shift to the second quarter, which will take a toll on the current quarter's sales.

The company expects to earn 88 to 93 cents per share for the first quarter; analysts anticipated earnings of 95 cents per share.

Signet also said Thursday that it is raising its dividend by 20 percent from 10 cents per share to 12 cents per share. The company operates 1,853 specialty retail jewelry stores in the United States and United Kingdom.

The company's shares fell $2.25, or 4.4 percent, to $49.01 by mid-afternoon.