Released: 05/09/2001

Signet posts First Half Profit advance

Group profit before tax: £40.2m (2000/01: £38.7m)	up 4%
Group sales: £629.7m (2000/01: £525.7m)	up 20%
Group like for like sales	up 1.7%
Earnings per share: 1.6p (2000/01: 1.6p)	unchanged
Interim dividend per share: 0.289p (2000/01: 0.275p)	up 5%

Terry Burman, Group Chief Executive, commented:

"We are pleased with the first half results which reflect the underlying strength of the Group. The UK business again did extremely well. The US business moved further ahead of the competition and gained market share in a very challenging retail environment.

The outcome for the year as a whole will depend on trading conditions on both sides of the Atlantic over the critical Christmas period. The Group remains under tight control and we have confidence in our proven strategy."

Enquiries:	Terry Burman, Group Chief Executive	+44 (0) 20 7404 5959
	Walker Boyd, Group Finance Director
	Mike Smith, Brunswick	+44 (0) 20 7404 5959
	Rupert Young, Brunswick

Signet, the world's largest specialist jewellery retailer, operates 1,616 stores. These include 1,014 stores in the US, where the Group trades as "Kay Jewelers", "Jared - The Galleria Of Jewelry" and under a number of regional names, and 602 stores in the UK, where the Group trades as "H.Samuel", "Ernest Jones" and "Leslie Davis". Marks & Morgan Jewelers, Inc. ("Marks & Morgan") which was acquired on 31 July 2000 is excluded from all like for like sales comparisons. Further information is available at www.signetgroupplc.com.

Group

In the 26 weeks to 28 July 2001 Group profit before tax rose by 3.9% to £40.2 million (1H 2000/01: £38.7 million). Sales advanced by 19.8% (13.1% at constant exchange rates) to £629.7 million (1H 2000/01: £525.7 million). Like for like sales were up by 1.7% and Group operating profit increased by 13.9% to £50.1 million (1H 2000/01: £44.0 million). An increase in the tax rate resulted in unchanged earnings per share of 1.6p.

Overall the first half year results reflect the inherent strength of the Group's geographic balance, a strong like for like sales performance in the UK providing a counterbalance to the effect of the difficult trading environment in the US. UK like for like sales increased by 10.0%, a strong result at the upper end of retail sector performance. US like for like sales were down by 1.3%, a comparatively robust performance, and the business demonstrated its resilience by again significantly outperforming the main competition and gaining market share.
The Board has declared an increased interim dividend of 0.289p per ordinary share (1H 2000/01: 0.275p).

Operating Review

US (74% of Group sales)
US operating profit rose by 10.6% to £48.1 million (1H 2000/01: £43.5 million). Sales for the period rose by 24.1% (14.5% at constant exchange rates) to £462.9 million (1H 2000/01: £372.9 million); like for like sales decreased by 1.3%. In the first quarter February was the strongest month, helped by Valentine's Day, with March and April experiencing a weakening trend. In the second quarter like for like sales fell by 3.4%, a performance similar to that of April. Gross margin for the six months was in line with that of last year. Operating profit benefited from a very firm control of expenses and from leverage of fixed costs following the previous year's acquisition of Marks & Morgan. Bad debt charges increased to 3.1% (1H 2000/01: 2.7%) of total sales and were in line with the average of the previous five years.

During the period a further 13 mall stores were opened and six were closed. It is expected that 29 mall stores will be opened in the second half and 11 will be closed. The successful programme of mall store enhancements continues; 62 stores were refurbished or relocated in the first half, with a further 38 planned for the second half. One new Jared destination superstore was opened in the first half, with a further 11 planned for the second half, bringing the total to 55 stores by the year end compared to an original target of up to 58. The performance of the Jared stores continues to exceed the average like for like sales performance for the US business. In total it is expected that approximately 6% will have been added to US selling space by the end of the current year. Overall capital expenditure levels are being managed against tightened real estate criteria.

Inventory levels have been closely controlled and aligned to current sales. Development of new merchandise ranges, careful testing of new products and support for proven best sellers has continued. The diamond range will be further extended in the second half with particular focus on three-stone diamond rings, three-stone diamond pendants and the wedding category. The lower cost of advertising and a further shift to television and radio is anticipated to result in a circa 11% increase in broadcast advertising impressions in the second half. Overall it is expected that the advertising cost to sales ratio will be maintained at the same level as last year.

In August the like for like sales performance of the core US business has continued in line with that of the second quarter. However the inclusion of Marks & Morgan in the like for like sales with effect from the start of the second half may have a small adverse affect on the reported figures. Marks & Morgan's like for like sales performance was below that for the rest of the US business in the first half. However, the contribution to operating profit has been only slightly below that anticipated at the time of acquisition due to higher than expected cost savings and gross margin. Marks & Morgan contributed £42.3 million to sales in the period.

UK (26% of Group sales)
UK operating profit rose by £2.4 million to £4.7 million (1H 2000/01: £2.3 million). Sales increased by 9.2% to £166.8 million (1H 2000/01: £152.8 million). The like for like increase was 10.0%. Both H.Samuel (16% of Group sales) and Ernest Jones (10% of Group sales) performed strongly within their market sectors in a favourable retail environment. Like for like sales increased by 6.4% and 16.6% respectively. Gross margins were slightly above last year's level.

Further improvements in operating standards and increased marketing contributed to the strong performance, as did the continued development of new merchandise ranges, with the core diamond and luxury watch categories performing particularly well. Sales through insurance companies to replace losses suffered by their clients continued to show good growth. It is planned to refurbish or relocate some 55 H.Samuel and 35 Ernest Jones stores this year. The year should also see the opening of a further ten H.Samuel and eight Ernest Jones stores, with a total of 16 store closures.

Group costs and taxation
Group central costs were £2.7 million (1H 2000/01: £1.8 million). Last year's figure included a gain on the disposal of properties of £1.0 million. Net interest payable and similar charges amounted to £9.9 million (1H 2000/01: £5.3 million) reflecting the financing costs associated with the acquisition of Marks & Morgan on 31 July 2000. The tax charge was £13.9 million (1H 2000/01: £12.4 million), an increase in the effective tax rate from 32.0% to 34.6%, reflecting the continuing transition to a more normal tax rate.

Net debt
Net debt at 28 July 2001 was £272.7 million (29 July 2000: £127.9 million; £141.3 million at constant exchange rates). The acquisition of Marks & Morgan added £107.5 million to debt from 31 July 2000. Group gearing (that is the ratio of net debt to shareholders' funds) at 28 July 2001 was 45.2% (29 July 2000: 25.5%). Since the beginning of this financial year, due principally to normal seasonal trends, net debt has increased by £43.6 million (1H 2000/01: £36.3 million). At constant exchange rates the increase was £36.4 million (1H 2000/01: £27.8 million). An increase in cash flow from operating activities was offset by higher tax and interest payments and a planned increase in capital expenditure. Total fixed capital expenditure in the current year is expected to be circa £65 million (2000/01: £56.2 million).

On 30 August 2001 the Group entered into a $410 million unsecured multi-currency five year revolving credit facility agreement. This replaced the $250 million and $100 million facilities which were due to expire in July 2003. The terms of this agreement are broadly similar to those of the facilities being replaced.

The Group is also proceeding with a replacement securitisation facility on its US credit card receivables programme. The current facility expires at the end of September 2001 and was originally for an amount of $191.5 million.

Prospects

In the US the economic outlook remains uncertain and recent interest rate and tax cuts have yet to show through in consumer spending. In the UK consumer confidence currently remains high but some slow-down in spending later in the year cannot be discounted.

While the Board takes encouragement from the Group's resilient performance in the first six months, the outcome for the year as a whole will be dependent on the trading environment prevailing on both sides of the Atlantic over the critical Christmas period.

This release includes certain forward-looking information that is based upon management's belief as well as on assumptions made by and data currently available to management. This information, which has been, or in the future may be, included in reliance on the "safe harbor" provisions in the Private Securities Litigation Reform Act of 1995, is subject to a number of risks and uncertainties, including but not limited to, the factors identified in the Company's 2001 Annual Report and Form 20-F and other documents filed with the US Securities and Exchange Commission. Actual results may differ materially from those anticipated in such forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein may not be realised. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

The interim report will be posted to shareholders on or around 17 September 2001. Copies of the interim report may be obtained from the Company Secretary, Zenith House, The Hyde, London NW9 6EW.

There will be an analysts' presentation at 2.30 p.m. London time today (9.30 a.m. New York time). For all interested parties there will be a simultaneous webcast available at www.signetgroupplc.com and a live conference call. The details for the conference call are:

	European dial-in:	+44 (0) 20 8240 8242	Password: "Signet"
	48 hr replay:	+44 (0) 20 8288 4459	Access code: 698452
	US dial-in:	+1 303 267 1021	Password: "Signet"
	48 hr replay:	+1 303 804 1855	Access code: 1154702

The third quarter sales for the 13 weeks ending 27 October 2001 are expected to be announced on Thursday 8 November.

Click here to view the Accounts to the 2001 Interim Results in PDF format.