Signet stands to lose pounds 85m in luggage sale: Salisburys disposal will cost jewellery chain millions in write-offs

SIGNET, the jewellery chain formerly known as Ratners, is to sell its ailing Salisburys chain of luggage shops, at a cost of pounds 85.4m in write-offs and provisions.

The announcement came as the group said it was to remove the Ratners name from all its shops by the end of June. The final 10, from a peak of about 250, will be converted to H Samuel or Ernest Jones within the next few weeks.

Signet is talking to several interested buyers but refused to indicate the likely price. It has written the net asset value down by pounds 10.8m, to about the amount it expects to receive, but would not disclose the net asset value before the provision.

The remainder of the pounds 85.4m charge reflects pounds 76.3m of goodwill written off to reserves when the chain was purchased, which now has to be charged against profits.

The City had long expected Signet to sell Salisburys, but many doubt whether a buyer can be found. In the year to 29 January, it lost pounds 5.3m, up from pounds 2.2m last time, as sales dropped 13 per cent to pounds 54.4m. Jim McAdam, Signet's chairman, said the group had decided that turning it around would take up too much time.

Salisburys losses pushed Signet into a pounds 84.4m loss for the year, more than double the pounds 40m loss last time. But Mr McAdam said that, excluding the luggage chain, pre-tax profits from the jewellery business were pounds 6.9m.

The UK chains returned to profit after two years of losses, making pounds 2.2m compared with a pounds 19.3m loss last time. Sales, excluding closures, rose 2 per cent, but that masked an 8 per cent decline at the remaining Ratners stores. Ernest Jones and H Samuel rose by 8 per cent and 3 per cent.

Mr McAdam said turnover was still rising but with most sales made in the run-up to Christmas, it is impossible to gauge the likely performance this year.

In the US, the Sterling chain's profits almost doubled to pounds 40.4m, on sales up 11 per cent at pounds 555.7m. That was partly due to exchange gains, but the underlying profits increase was 75 per cent.

Mr McAdam attributed the rise to the quality of management and the economic recovery. The group has opened two superstores, 10 times larger than traditional Sterling stores, as a test and plans a further three in the autumn.

Mr McAdam said costs had been cut by pounds 92m in the two years since the recovery programme started, following a slump in sales caused by the recession and the bad publicity after Gerald Ratner, former chairman, described one of the products as 'total crap'.

Loss per share was 38.3p, double last year's, and there are no dividends. The shares fell 1p to 44.5p.

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