Six Takeaways From Yesterday’s Signet Conference Call

The company is taking new steps on sexual harassment, keeping senior management, and struggling in malls

JCK News Director


  • Nick White

    I appreciate Rob Bates concise summary of the key point’s that management made during Signet’s most recent conference call. In that regard, I would offer the following counter points that are just my opinion:

    a) Sterling has fully embraced omnichannel-that remains to be seen. Sterling has promulgated a 1970 profit model throughout the company’s culture and an insider will never be able to overcome that inertia. Without a significant transformative leader, Sterling will continue as a mall based-retail culture that has a website, all be it an expensive one.

    b) It is a possible sign that the company is moving away from shopping centers-Sterling’s cultural commitment to maximizing the company’s 1970 style retail distribution strategy is best illustrated by the acquisition of Zale. Clearly, the Chairman’s statement that the acquisition has been successful warrants further discussion. Nevertheless, the acquisition was a large strategic blunder driven more by short-term, investor self-interest at the expense of developing sustainable strategic advantage. That is further illustrated by Sterling’s continued capital investment in new mall stores.

    c) Sterling’s proprietary brands have more than doubled in the last year-that is not say much given the performance of the individual brands. In large part, customers buy what they are shown by sales associates, emphasized in the showcase, and advertised in various types of media. Again, it remains to be seen if any of these brands have sufficient awareness to increase the trade-names top of mind awareness. Equally problematic is whether the company maximizes profitability emphasizing these brands.

    d) Todd Stitzer laid out the company’s position on sexual harassment-No other issue emphasizes the importance of culture. Sterling spends a lot of time and money recruiting middle and senior management, including extensive psychological testing, to ensure management conforms to the leadership’s values and management style.

    This case is not new, I have written about it, as have other editors of jewelry trade magazines. However, what is new is new is that the cold facts and specific allegations made by the plaintiffs are in the public domain, which affords the well-deserved scrutiny of Sterling’s carefully crafted culture promulgated for decades.

    Similarly, it is problematic if the creation of a board investigation, appointment of a consultant to review the company’s policies, and establishment of a new independent ombudsman, are more than a line item in the company’s ill prepared crisis management talking points, at least if the coercive results of the company’s TIP (whistle blower) program is the measure.

    What the outcome of the arbitration case will be also remains to be seen. Arbitrators are engaged by large companies, and like government, lobbyists have a conflict of interest in favor of their company’s employer. Notwithstanding the outcome, Todd Stitzer’s contention that the sworn statements of more than 100 women alleging inappropriate sexual conduct for jobs or promotion in the arbitration case record are irrelevant because the plaintiff’s case is that Sterling practiced a pattern of gender discrimination in the firm’s promotion practices, brings into murky light a culture that in practice frames the company’s values in 20th century terms that at best ignores women and at worst devalues women and men too, when they do not conform.

    Historically, research about how consumers choose the jewelry stores they shop first, suggest that a majority go to a store recommended by a trusted friend. In addition, since fine jewelry is an infrequently purchased, high-risk product, subsequent purchases involve a process of gathering information from a number of jewelry stores. Eventually, consumers frequently buy from the store where they believe they have the best relationship with the manager and the sales associate. Moreover, about 60% of the time, they buy from the store they visited first.

    Given this consumer behavior, the heightened role of identity politics, and consumers access to social media, it is clearly questionable just how many customers will want a “Kiss from Kay” in the future if the shadows of the past continue into the future.