The operating margin was 10.9% (Q1 2005/06: 11.3 percent), having also been negatively affected by the timing of Mother's Day. As anticipated, the gross margin was lower due to mix changes and commodity cost increases; the former having again enhanced like for like sales growth.
A range of management initiatives, including selective action on selling prices helped to minimise the pressure on gross margin. The bad debt ratio was lower than the first quarter of last year.
United Kingdom (circa 27% of Group annual sales)
The general retail environment remained challenging and divisional like for like sales showed a small decrease of 0.7 percent resulting in an operating loss of £(1.6) million (Q1 2005/06: £(0.4) million).
Total sales at £91.3 million were unchanged from the comparable period last year. As expected, gross margin was lower reflecting increased targeted promotional activity, a strong performance by the insurance replacement business and higher commodity costs.
H.Samuel's like for like sales were down by 2.4 percent and those of Ernest Jones up by 1.3 percent. Both diamond participation in the sales mix and average selling price continued to increase.
Group Costs, Financing Costs and Net Debt
Group costs were £2.0 million (Q1 2005/06: £1.5 million). Financing costs were £1.5 million (Q1 2005/06: £1.6 million). Net debt at 29 April 2006 was £93.1 million (30 April 2005: £76.0 million).
Comment
Terry Burman, Group Chief Executive, commented: “Group profit before tax was 10 percent ahead of the first quarter of last year and like for like sales increased by 2.8 percent. This was a good performance given the adverse impact of the timing change of Mother's Day in the US and the continuation of demanding trading conditions in the UK.
marketing@alchempro.com
