August tarnishes Signet results

Jewellery sales lost their sparkle last month as higher interest rates made consumers more cautious, the transatlantic jewellery group Signet said yesterday.

The company - whose 1,725 outlets include Ernest Jones and H Samuel in Britain plus Kays and the more upmarket Jared in the US - was announcing first-half profits up 14% at £54m, despite the weaker dollar. At constant exchange rates, profits were ahead 27%.

Signet generates more than two-thirds of group sales in the US and several leading retailers there recently warned of slowing trade. Terry Burman, chief executive, played down last month's decline and described the group's results as "excellent".

He said August sales were always slow and did not mean the second half - when the jewellery business generates the bulk of its sales - would be the same. He pointed to one-offs such as the Florida hurricane and last year's US tax rebates as partly to blame for this year's poorer figures.

"While there has been some softening of the trading environment in August on both sides of the Atlantic, this is not necessarily indicative of trading prospects for the balance of the year."

In Britain, where Signet has 599 outlets, like-for-like sales were ahead 5.5% in the first half. Group like-for-like figures were up 7.4%.

Sales had been boosted on both sides of the Atlantic by customers splashing out for Valentine's day.

Mr Burman pointed to diamonds and luxury watches as top sellers.

He also revealed plans to increase capital expenditure by 57% to £80m this year. The cash will be spent on revamping or relocating 85 UK stores, compared with 32 last year. In the US there are plans to increase selling space by 8%.

The shares were the second biggest faller in the FTSE 250, closing down 2.25p at 102.5p.