Signet gets £474m private equity boost

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Signet Jewelers Limited has announced today affiliates of Leonard Green & Partners (LGP), a leading private equity firm, will invest $625 million (£474m) in the form of convertible preferred shares.

Signet will use the proceeds from the LGP investment to fund a repurchase of up to $625m (£474m) in common stock either in the open market or through privately negotiated transactions.

In conjunction with this transaction, Signet will expand its board of directors from ten to eleven and appoint Jonathan Sokoloff to the Signet board upon the closing of the transaction, which is expected to occur in the third quarter of FY 2017.

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Mark Light, chief executive officer of Signet Jewelers, comments: “We are very pleased to announce this strategic partnership with Leonard Green, one of the most experienced and successful investors in the retail industry.

For more than 25 years, Leonard Green has successfully partnered with some of the best known companies in the retail sector and worked to create significant shareholder value. We view Leonard Green’s significant investment in Signet as a strong vote of confidence in our business and its long term growth prospects.”

This morning Signet also reported is second quarter Fiscal 2017 results for the 13 weeks ending July 30, 2016.

Overall, Signet’s total sales were down 2.6% to $1,373.4 million, with approximately 50% of the decline from the oil patch. This compares to $1,410.6 million in the 13 weeks ended August 1, 2015 (“second quarter Fiscal 2016″).

Total sales on a constant currency basis declined 1.3%, while same store sales decreased 2.3% compared to an increase of 4.2% in the second quarter Fiscal 2016.

However, in the UK, jewellery store sales increased 0.8%, with average transaction values increasing 2.5%. Signet says this was driven principallu by strong sales of diamond jewellery and prestige watches.

Elsewhere the number of transactions decreased 3.0% due primarily to lower sales in fashion watches.

Ernest Jones and H Samuel sales decreased by 7.7% and 9.8% to 76.4m and 68.8m respectively.

“We are disappointed by our Q2 results and market conditions have been challenging particularly in the energy-dependent regions. This has contributed to a downward revision in our annual guidance,” says Light.

“We have experience and success in navigating through the kind of uncertain business conditions we are seeing today. We are confident that our organisation will do so again this year. We are intensely focused on preparations for the fourth quarter when we will launch new initiatives around merchandising, marketing, digital, and the customer experience.”

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