Signet's sales shine thanks to US market

The "greater brilliance" promised by Signet's new Leo diamond was something of a theme in yesterday's interim results from the jewellery empire. Long gone are the days when the former Ratners hid its head in shame at suggestions that prawn sandwiches offered greater value than its trinkets.

The group has seen its profile sparkle since it decided to set up shop across the pond, where it still has plenty to go for, with just a 7 per cent share of the highly fragmented market. Indeed, the opportunity for expansion – both organically and via acquisitions – should make sure Signet's top line keeps twinkling even if Americans rein back their spending. In particular, the rollout of the group's Jared superstore chain, which outstrips underlying sales in the rest of the US business, is expected to boost US selling space by 6 per cent this year, taking the number of stores to 1,052.

Signet's focus is persuading customers to spend more on diamonds. Leo has already proved popular with Americans and Terry Burman, the group's chief executive, hopes customers of Ernest Jones will feel the same when the new stone hits their shops in time for Christmas.

Figures yesterday for the six months to 3 August showed pre-tax profit had risen by 18 per cent to £47.5m on sales ahead by 8 per cent at £682.8m. Underlying sales were similarly strong, up by 7 per cent.

The question that has dogged the stock – down by one third to 85.25p since this column advised investors to take profits in April – remains the depth of customers' pockets as concerns spiral over the possibility of economic meltdown. Unlike a diamond, the shares may not be for life, but on an undemanding price-earnings ratio of 11.5 times they are worth a look.

Wimpey's run far enough

Despite the continuous warnings of a housing bubble having built up, it is hard to see real danger signs for the likes of George Wimpey, which reported interim results yesterday. Interest rates are low, not likely to rise any time soon and the market is underpinned by the structural under-supply of new homes. Wimpey's orders, at the end of August, are up 23 per cent on last year

Wimpey has been getting its house in order after years of poor management. Margins, at 12 per cent, are below the industry average but are targeted to be 15 per cent within the next couple of years.

For the half year to 30 June, pre-tax profit, before exceptionals, jumped 63 per cent to £86.3m. The company said the full-year figures will be "well ahead" of expectations.

The turnaround in group fortunes is down to cleverer land buying – purchasing the right sites for developments is the key skill in the industry – and its acquisition of rival McAlpine. Last year's McAlpine deal is being bedded down well, with costs taken out of the acquisition. The move has significantly boosted volumes, the land bank, and the average selling price at Wimpey. The company's shares closed down 3.25p at 280p, putting the stock on a forward multiple of 6. While this is cheap, the shares have already had a great run, so it's a hold.

Not so simple for Easynet

Given the telecoms sector's well-documented problems, it should come as no surprise that the telecoms services firm Easynet is having a tough time. When the market turned down, its strategy of providing business customers with high-speed access to the internet was never going to be plain sailing.

And, like so many other telecoms firms, its financials make for particularly unpleasant reading. In the first six months of the year, the company made a pre-tax loss of £53m compared with a loss of £10.6m in the same period a year ago.

While the loss included hefty restructuring charges, even on an underlying, or Ebitda, basis, the company still made a £14.5m loss in the first half.

On a more positive note, Easynet says it remains confident it will meet its year-end targets for revenue, underlying profits and for cash. And at least Easynet has £142m of cash on the balance sheet.

But it still faces a host of challenges including stemming the losses at its European businesses and ensuring its UK arm, which turned Ebitda positive in July, continues to make progress.

Given the ongoing uncertainty in telecoms and the economy in general, there is no hurry to buy into this story.