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Thursday, 03/27/2014 10:46:13 AM

Thursday, March 27, 2014 10:46:13 AM

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RAPAPORT... Signet Jeweler's revenue rose 3.4 percent year on year to $1.56 billion during the fourth quarter that ended on February 1. Comparable-store sales increased 4.3 percent and cost of sales rose 4.4 percent $915 million. Signet's profit improved 1.7 percent to $175 million or $2.18 per diluted share.

U.S. division sales improved 3.5 percent to $1.29 billion in the fourth quarter, while same-store sales rose 5 percent. Sales increases were driven by a variety of merchandise categories but the strongest performance came from bridal, colored diamonds, fashion jewelry, beads and watches. The average merchandise transaction value increased at Kay, primarily from greater sales of branded merchandise; however, the average transaction value declined at Jared. Signet's ecommerce sales in the U.S. surged 10.9 percent to $61.9 million.

In the U.K., sales as reported in dollars improved 1.4 percent to $272.2 million, but same-store sales jumped 5.7 percent in the fourth quarter. Sales performance was driven by bridal and fashion diamond jewelry, fashion and prestige watches, exclusive of Rolex, which is being offered in fewer stores. The average merchandise transaction value remained consistent year to year at H.Samuel, however, the average value fell slightly at Ernest Jones. Online sales in the U.K. surged 32.6 percent to $17.1 million.

Signet's fiscal year sales rose 5.7 percent year on year to $4.21 billion, cost of sales jumped 9.9 percent to $2.63 billion and net income improved 2.2 percent to $368 million or $4.56 per diluted share.

Signet's board declared an increased quarterly dividend of 18 cents per share, payable on May 28.

Mike Barnes, Signet's CEO, said, “Signet performed well during the year delivering a 4.4 percent increase in same-store sales and a 4.8 percent increase in earnings per share (EPS). I would like to thank all Signet associates for their contribution to these results. In addition, and importantly, in February we negotiated and executed an agreement to acquire the Zale Corporation, which will transform the combined companies after the transaction is closed. The Zale team has done a great job turning its business around, and we are excited about the opportunities of helping to take Zale to the next level.”

Barnes added that Signet's growth can be attributed to a coordinated omnichannel strategy that creates an outstanding customer experience, delivers compelling merchandise and maintains cost controls. ''Our priorities remain focused on delivering an outstanding experience to all our customers. We will continue to execute on our multichannel growth initiatives and expand our store base. Our increase in the quarterly dividend demonstrates our belief in the strength of the business and our commitment to increase value for our shareholders. We remain confident in achieving our fiscal 2015 goals and making significant progress toward our long-term objectives, including those related to the acquisition and successful integration of Zale Corporation,'' he said.

Signet has hired McKinsey & Company to work alongside its internal team to ensure an effective integration with Zale. Signet expects to utilize approximately $600 million of receivables securitization and $800 million of other debt financing during the acquisition process.

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