May 8 (Bloomberg) -- Signet Group Plc, the world's largest specialty jewelry retailer, said a sales decline eased in the first quarter as refurbished British stores drew shoppers.

Revenue at stores open at least a year fell 2.5 percent in the 13 weeks ended May 3, the London-based company said today in a statement. That was less than the 6.7 percent drop in last year's fourth quarter. Same-store sales gained 5.3 percent in the U.K., compensating for a 4.7 percent drop in the U.S., where the retailer gets about three-quarters of annual revenue.

Signet rose to a five-month high in London trading. The retailer spent 9 million pounds ($17.6 million) renovating its British H. Samuel, Ernest Jones and Leslie Davis stores in fiscal 2008 and has refurbished 133 outlets over three years. Profit fell 19 percent last year, hurt by rising gold and platinum prices and weaker consumer spending on both sides of the Atlantic.

``This represents a solid start to the new financial year, although the comparatives are significantly more testing over the next two quarters,'' Investec Securities analyst David Jeary wrote in a note. He has a ``hold'' recommendation on the stock.

Signet gained 5.25 pence, or 7.3 percent, to 77.25 pence in London trading, the highest close since Nov. 23. The stock has risen 11 percent this year, beating a 12 percent drop in the 19- member FTSE 350 General Retailers Index.

Gold, Platinum

Signet, which runs more than 1,400 Kay Jewelers and Jared shops, raised prices in its U.S. stores after Valentine's Day to pass on higher gold and platinum costs. The gold price has risen 27 percent in the past year and platinum has gained 48 percent.

The results of the price increases are ``encouraging'' and a full evaluation will be completed by the summer, Signet said.

The 4.7 percent decline in sales at U.S. stores open at least a year was less than the prior quarter's 8.6 percent drop. The retailer raised prices by a ``meaningful'' amount, Chief Executive Officer Terry Burman said last month.

``We believe it is too early to call a U.S. consumer recovery or the impact of the price rises introduced after the Valentine's Day promotion,'' Investec's Jeary said.

Zale Corp., the largest U.S. jewelry chain by number of stores, said today same-store sales rose 5.8 percent in the three months ended April 30 after ``aggressive clearance.''

The same-store sales growth in Britain compares with a 3.3 percent decline in last year's final quarter. Redesigned stores and product promotions helped revenue this year, according to Burman. Signet plans to almost triple its investment in its U.K. stores in fiscal 2009 to 25 million pounds.

H. Samuel and Ernest Jones are ``outperforming'' the U.K. retail industry, Burman said in the statement.

Signet has said it plans to relocate its headquarters to Bermuda and shift its main share listing to the U.S.

To contact the reporter on this story: Loveday Morris in London at lmorris7@bloomberg.net

Last Updated: May 8, 2008 12:17 EDT