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Signet Jewelers Q4 Profit Rises; Boosts Dividend

Signet Jewelers Ltd. (SIG, SIG.L) on Thursday reported a 49 percent increase in profit for the fourth quarter from last year, reflecting higher sales and gross margin.

The specialty retail jeweler's same store sales for the quarter grew 6.9 percent, compared to an increase of 8.1 percent in the prior-year period.

However, Signet forecast earnings for the first quarter mostly below analysts' estimates. For fiscal 2013, the company expects to increase sales and gain profitable market share. In addition, the company's board hiked the quarterly dividend by 20 percent.

About 80.5 percent of Signet's sales in the fourth quarter came from the U.S., where the year-over-year growth was 8.3 percent. Same store sales also rose 8.3 percent. The Kay brand grew sales 10 percent, while at the more expensive Jared brand, sales increased by 9.7 percent.

Sales at the U.K. Division, which accounted for about 20 percent of total sales, grew 0.1 percent. Same-store sales at the division rose 1.7 percent.

Signet's gross margin rate for the quarter increased by 80 basis points to 41.6 percent, primarily benefiting from leverage of store occupancy costs in the U.S. and UK divisions.

Gross margin also benefited from an improved net bad debt to total sales ratio in the U.S. division and improvement in inventory related costs.

Signet's net income for the fourth quarter was $156.6 million or $1.79 per share, up from $105.4 million or $1.21 per share in the year-ago period.

The prior-year results included a non-recurring 'Make Whole Payment' of $29.5 million or $0.34 per share from the prepayment in full of its private placement notes.

On average, seven analysts polled by Thomson Reuters expected the company to earn $1.77 per share. Analysts' estimates usually exclude special items.

Total sales for the quarter rose 6.6 percent to $1.35 billion from $1.27 billion in the year-ago period. Analysts had a consensus revenue estimate of $1.36 billion.

Looking ahead, Signet noted that U.S. same store sales for February 2012 were up 7.6 percent, with UK same store sales declined 3.1 percent. Overall, the company's same store sales in the month rose 6.2 percent.

Due to the impact of the calendar shift, Signet expects first-quarter same store sales in the low single digits and earnings per share in a range of $0.88 to $0.93. Analysts expect the company to earn $0.93 per share for the quarter.

For fiscal 2013, Signet expects to increase sales and gain profitable market share. The company also projects a gross margin rate broadly similar to fiscal 2012, by offsetting commodity cost increases through improved store productivity and pricing.

The company's board has approved a 20 percent increase in the quarterly dividend to $0.12 per share from $0.10 per share.

The first-quarter dividend is payable on May 29, 2012 to shareholders of record on April 27, 2012, with an ex-dividend date of April 25, 2012.

In Thursday's regular session, SIG is trading at $50.00, down $1.26 or 2.46 percent on a volume of 435,483 shares.

by RTT Staff Writer

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