Time to get in at SIGNET

Fans of fine metals and stones are in for a disappointing start to the year as news comes in of tough trading in high street jewellers; Jemma George looks at Goldsmiths and awaits news from Theo Fennell.


The latest report comes from Goldsmiths Group, which has recorded flat like for like sales for the four weeks to Christmas, saved by the skin of its teeth by last minute booster on Christmas Eve.

The annualised figures for the year to 24 December were a little more encouraging at +4% on a like for like basis.

Goldsmiths was subject to a management buyout in 1999 and thus the report issued today has no direct influence on investors, but similar to John Lewis/Waitrose trading statements which offer an extra guide to performance in the retail sectors, Goldsmiths statement should prove useful to those with an interest in quoted stocks such as Signet and Theo Fennell.

Chairman and chief executive Jurek Piasecki said Goldsmiths traded well until May, but then things began to slowdown quite dramatically. November was described as 'slow' while December was very slow with a late rush on the two days before Christmas.

It is fair to assume that peers such as Signet Group and Theo Fennell, while they have their differences, are also subject to some of the same pressures.

Signet (SIG), which describes itself as the world's largest speciality retail jeweller with almost 1,700 stores (611 in the UK), recorded decent like for like sales for the 13 weeks to 2 November including a 4.8% rise in the UK. Benefits also came from increased efficiencies, a reduction in bad debts and lower interest charges as debt fell from £300 million to £255 million.

However, there was clear evidence of consumer caution in the lead up to Christmas with like for like sales slowing through November, and leaving the group reliant on a bumper spend in the third week of December.

We have also heard recently from Theo Fennell (TFL), the small but funky design-led jewellery group, which returned a decent performance to September, but has yet to comment on Christmas sales.

Theo is almost boutique compared to Goldsmiths or Signet, with profit margins very much the priority over volume. It also attracts, or uses, a number of celebrities to achieve quasi-endorsement of certain products, a strategy also adopted by top brand Mouawad.

Another difference is the use of brands for different product ranges, but these will need decent marketing campaigns to lift sales, particularly in tougher times.

For the potential growth Theo Fennell is a risky but reasonable bet and our preferred choice to Signet (also listed on the New York stock exchange), but wait for the Christmas trading statement and bear in mind the first few months of 2003 will not be easy.