Signet profit falls on bad debts in U.S.

By Mark Potter

LONDON (Reuters) - Signet (SIG.L), the world's biggest speciality jewellery retailer, posted a 24 percent fall in first-quarter profit on Friday and said bad debts in its main U.S. market had risen, hitting its shares.

The firm, which trades as Kay Jewelers and Jared the Galleria of Jewelry in the United States, said profit before tax fell to $38.6 million (19.70 pounds) in the 13 weeks to May 5.

Like-for-like sales were down 4.7 percent in the United States.

Comparable sales rose 5.3 percent in Britain, where Signet trades as H Samuel and Ernest Jones, but the firm said "given the increasing pressure on consumer expenditure in the UK and demanding second quarter comparatives, like-for-like growth is not expected to continue at this level."

Signet said its ratio of net bad debt to total sales in the United States rose 70 basis points.

"There are no real surprises in the results themselves although the increase in the bad debt ratio in the United States, albeit somewhat predictable, points to potential forecast downside," Cazenove analysts said in a research note.

At 11:55 a.m., Signet shares were down 3.5 percent at 61.25 pence, off a low of 59.5 pence and valuing the firm at about 1 billion pounds.

Signet has been hit hard by a downturn in discretionary spending by shoppers on both sides of the Atlantic as they cope with rising food and fuel bills and weak housing markets.