Will Signet shine?

By GEOFF FOSTER FOR MAILONLINE
Updated:

 

RUMOURS circulating in the jewellery trade suggest that Signet (unchanged at 108p) could be up to something.

The Ernest Jones-to-H Samuel group recently revealed that UK trading in the first half lost a lot of its sparkle, but its US division, which operates the Jared and Kay Chains, saw like-for-like sales jump by an impressive 7.9%.

It makes most of its profits in the runup to Christmas. Chief executive Terry Burman usually concentrates his efforts on the forthcoming 12 weeks or so, but he is now said to have other things on his mind.

Whitehall Jewellers, which operates 388 stores across 38 states in the US, is in trouble. It has announced the resignation of chief executive Beryl Raff and has said it is 'reviewing its financial situation in the light of current and forecast operating results'.

Whitehall also needs additional capital to support its operations. Raff's departure is a big surprise because she has been described as the Warren Buffett of jewellery-industry merchandising.

Analyst Justin Scarborough at Panmure points out that Signet has made no secret that bolt-on acquisitions may exist in the US. Whitehall, which has just over 1% of the US speciality jewellery market, could be a target.

A purchase of Whitehall for around £110m could enhance Signet's earnings by at least 5% and make the stock a lot more attractive.

England's first-innings batting performance at the Oval was more important that the Footsie yesterday, which drifted 25.1 points lower to 5340.8. The Bank of England's decision to keep interest rates on hold at 4.5% came as no surprise but Wall Street's early 41-point fall deterred any late buying interest.

Fund manager Amvescap closed 10p better at 377½p amid suggestions that Janus Capital, a US-based mutual fund, could be interested in launching a bid. Canadian fund manager CI Financial approached Amvescap earlier this year but walked away.

 

• FREE: Annual company report for Signet

 

Exel accelerated 16½p to 1206½p as City shrewdies predicted that United Parcel Service will soon confirm its predatory interest and will lock horns with Deutsche Post in the battle for control of the British logistics group.

Engineer FKI jumped 7p to 113p on vague talk of a US bid. An overhang of stock was also cleared.

Brentwood motor insurer Highway, which has held takeover talks with Cox Insurance and Chaucer over the past 18 months, cruised 11p higher to 56¼p on hefty turnover of 18m. Broker Arbuthnot crossed 12m shares at 55p a share following the excellent interim results. They showed a 110% dividend rise to 1.6p and that profits had more than doubled to £11.3m.

 
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Reinsurance broker Benfield, which earns 75% of its income from the US, collapsed to 275¼p before closing only 1¾p off at 295p following disappointing half-year figures. Interim trading profits fell 14% to £82m but the group is optimistic about post-Katrina opportunities.

Rival Kiln shed 4½p to 93p after warning that the net loss for its business caused by Katrina is expected to be in the region of £80m to £100m.

News of a widening half-year loss and adverse comments on an industry website about its interests in Russia left Celtic Resources 84p down at 220p.

Copper Resources jumped 7p to 44½p following its acquisition of 75% of Miniere Musoshi Kinsenda, which holds three deposits in the south of Katanga Province of the Democratic Republic of Congo.

Intandem Films held at 3½p despite securing a UK distribution deal with Vertigo Films for the feature film Stoned, which will be released in the UK and Ireland in November, followed by a DVD release next spring. Chairman Gary Smith hopes to close a US deal at the forthcoming Toronto Film Festival.

Crosby Capital Partners advanced 10½p to 85¼p amid talks of imminent developments.

On completion of the reverse takeover of Trading Exchange, dealings in EBT Mobile China got under way. The close was 5¼p better at 34¼p.

• BUYERS dived in for Aim-listed SubSea Resources on hearing that the salvage company, which has the technology to go down to 20,000 feet, has located a 19th-century steamship in Atlantic waters carrying gold and silver coins that have been valued at between £2.7m and £4.4m.

The John Lethbridge, its recovery vessel, will leave Falmouth dry dock on September 16 and start recovery work in October. Shares rose 2½p to 33p.

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