This week, I heard from a lot of people who do business or are associated with Signet. Naturally, the latest CEO switch dominated the conversation. Many were fearful, but some, as you will see, were hopeful.
If you are optimistic about the future of Signet, you see the appointment of Virginia “Gina” Drosos (pictured) as a breath of fresh air. The tried-and-true formulas that catapulted Signet to the top are looking past their prime and need a rethink. She’s familiar with Signet, having sat on its board. She has extensive experience managing big operations. She can do strategy. She seems like she’d be a good liaison for Wall Street—and the financial sector has given Signet problems lately. Her experience as a group president at Proctor & Gamble, where she handled a division whose revenues roughly equal Signet’s, shows she understands the importance of appealing to the consumer.
In addition, Signet has solid financials—it just sold part of its credit book for $1 billion. Kay, Jared, Zales, and Piercing Pagoda remain solid brands with high consumer awareness. The company still posts a nice profit. So, even if the comp declines continue, the company will be fine.
If you are pessimistic, you note that Drosos has no jewelry, luxury, or retail experience. Signet got to where it was by cultivating experienced executives that know how to sell jewelry better than just about anyone else on the planet. A lot of those people are gone. So we now have an inexperienced jewelry executive without an experienced team to support her.
In addition, while we always say this industry needs new blood, the success rate of outsiders coming into this business has always been mixed.
Finally, Signet has a lot of issues that could prove tough for just about anyone to fix. Mall traffic is down, and that’s the backbone of its business. Overall jewelry sales are stagnant. The sale of the top-end of its credit book was designed not to decrease sales, but clearly Signet will now have less flexibility as far as approvals. And of course, the company is still fully integrating Zales, two years after its purchase. That purchase was okayed by Signet’s board, the same board that put Drosos in her current role.
Where do I come down? To be in the jewelry business, you must be an optimist. It’s in the interest of this entire industry that Signet succeed. It’s become too big to fail.