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Key performance indicators
Net new store space growth
The growth in new store space provides the potential for future profit growth and is a driver of the Group’s investment in fixed and working capital.
In the US, there is the long term potential to nearly double store space in existing formats. The constraint on growth is the availability of staff trained to the Group’s standards and the ability to secure real estate leases that satisfy the Group’s criteria. It is anticipated that about half of new store space over the next five years will consist of Jared locations.
In the UK, it is anticipated that the number of H.Samuel stores will decrease while those of Ernest Jones may increase.
While the expansion in store space is expected to increase shareholder value in the long term, it has an adverse impact on operating profit margin and return on capital employed in the short term.
5 year compound annual growth 6.5%
Target: Increase in Group store selling space to average between 5% and 7% per annum over the economic cycle. In the current challenging trading environment the future rate of expansion in the US is anticipated to be less than in recent years, and the Group increase in space is expected to be 2%-5% in 2008/09 and 2009/10.
Definition: Percentage increase in store selling space over the prior year as at the year end.
Performance: The annual new store space increase of 6.5% over the five years was in the target range. In 2007/08 US net new space growth was 10% and in the UK there was a 2% reduction.