NEW YORK (Reuters) - Bermuda-based Signet Jewelers Ltd reported a higher-than-expected holiday quarter profit and said its Kay Jewelers and more upscale Jared chain have continued their streak of sales gains this quarter.But business at its British stores, which make up one-fifth of overall sales, has continued to shrivel and government austerity measures to rein in deficits there are hurting personal spending, chief executive Michael Barnes told investors on a conference call.Sales at US stores open at least a year were up 11.4 percent so far in the first half of the current quarter, echoing double-digit gains made over the holiday season that the company, and analysts, have attributed to winning market share from competitors such as Zale Corp.“This is driven by the US business,” said Matt Lockridge, an analyst at Westwood Holdings Group, which has owned Signet shares since April 2010.But Signet, which operates the H Samuel and Ernest Jones chains in Britain, said its same-store sales there fell 2.9 percent over the holiday quarter. They are also down so far in the current quarter.Lockridge expects British same-store sales to stabilise this year as Signet takes a greater share of a shrinking British jewelry market.Overall company sales during the fourth quarter rose 6.2 percent to $1.27 billion.Signet reported net income of $105.4 million, or $1.21 per share, for the fourth quarter that ended January 29, down from $115.5 million, or $1.34 per share, a year earlier. That decline came largely from payments made on private placement notes.Excluding one-time items, Signet earned $1.55 per share in the fourth quarter, beating Wall Street estimates by a penny, according to Thomson Reuters.Signet’s gross margin, which measure the profitability of the items it sold, rose 4.8 percentage points to 40.8 percent.Signet shares were down 31 cents, or 0.69 percent, at $44.49 in mid-morning trading on the New York Stock Exchange. The shares hit a yearly high of $46.01 last week.Both Signet US customers of more modest means and its middle-class shoppers bought necklaces, bracelets and diamond and gold rings in greater numbers over the holidays and for Valentine’s Day.The gains were particularly strong at the Jared chain, where jewellery is more than twice as expensive as at Kay and which competes with Tiffany & Co’s more moderately priced lines. The average item at Jared cost $721 compared with $298 at Kay last quarter. Prices were up at both chains compared with a year earlier.Jared’s same-store sales rose 17.5 percent over the holiday quarter and rose throughout 2010 after taking a hit during the recession. The Jared chain makes up about 30 percent of company sales, while Kay accounts for half.