Kay Comps Jump 7 Percent, “Ever Us” Strong

Robust comp gains at Kay Jewelers and Piercing Pagoda led Signet to solid third-quarter results, though behind-the-scenes changes depressed sales at both Jared and Zales.

Signet’s total sales for the third quarter of fiscal 2016 (ended Oct. 31) were $1.2 billion, up 3.3 percent. Overall comps also rose 3.3 percent.

Sales of the Ever Us two-stone ring are so far “better than expected,” CEO Mark Light said on a conference call following the release of its financial results.

“We are seeing it purchased for anniversaries, birthdays, mother-daughter events, even for self-purchase,” he said, calling it the biggest rollout in the company’s history, offered at all its store brands.

The company is considering expanding the Ever Us concept to earrings, necklaces, and different ring styles.

Corporate stars for the quarter included the Kay and Piercing Pagoda brands and U.K. chain Ernest Jones.

Piercing Pagoda saw comps rise 10 percent, with the increase driven by gold, piercings, and religious jewelry.

Kay posted a 7.1 percent comp jump, with strong sales from fashion jewelry and watches.

Zales same-store sales rose 2.3 percent, a slower rate than the previous quarter. This was partly driven by a decrease in the average transaction price, sparked by a shift to fashion jewelry.

“Zales has always done well within the bridal category,” said chief financial officer Michele Santana on the call. “Where they haven’t performed as well is in fashion jewelry. That has been a key area that we have helped to drive.”

Light added that Zales has seen strong initial sales in November and that Zales stores in particular have had “a lot going on,” including changes in merchandise, discount controls, scheduling, price tagging, and compensation.

“[All this was] consciously done in third quarter,” Light said. “We feel we made the right decision to get our people trained up in the smallest quarter of the year to get the Zales team members ready for the fourth quarter. And so far so good.”

Jared comps fell 2.7 percent, due to changes in store personnel and a shift in sales techniques, Light said.

But he expects a rebound this holiday, with new ads with Pandora and the introduction of Pandora jewelry and the rollout of the Vera Wang LOVE collection to all stores. Jared has also seen strong initial results in November, thanks in part to a rare promotional event.

“You will see a little more promotions at Jared,” Light said. “We think we are out of sync by not having those sales…. The Jared customer is looking for more events.”

Sales at its Gordon’s Jewelers chain, part of Zale Corp., fell 11 percent.

Ernest Jones’ sales rose 6.3 percent, due to diamond and watch sales. Sales at its other U.K. chain, H. Samuel, rose only 0.2 percent. Sales at Canadian chain Peoples Jewellers rose 2.2 percent, but sales fell 1.6 percent at the other Canadian nameplate, Mappins.

Light also addressed the following issues:

– The cannibalization between Kay and Zales is “minimal,” he said, citing research that showed that 65 percent of Kay customers never go to Zales and vice versa. “The more we get involved in our [customer] segment differences, the better it is going to get,” he said.

– While the environment has been extremely promotional for jewelry, he feels Signet is somewhat shielded by carrying proprietary brands. “Programs like Ever Us and Vera Wang LOVE and Neil Lane, if customers are excited about those brands, they can’t get them anywhere else, so they can’t get them at a discount,” he said. 

– The decline in the diamond market doesn’t offer many buying opportunities for Signet. “The lack in demand is from the Far East and Middle East. Right now the opportunities to make better buys are really in the better-quality rough and polished items. Those are not the goods that we use. We are a house that uses heavy I1s and SI2s.”

JCK News Director