Will We See More Signet Store Closures?

On yesterday’s Signet Jewelers earnings call, CEO Gina Drosos was asked about possible store closings.

“In terms of store count, we continue to look at traffic in the malls which were challenged again over the holiday season,” she said, according to a SeekingAlpha transcript. “And so, we continue to look at where our most profitable stores across our total line and make sure that we’re operating in the right places in the right malls.”

That’s not really an answer, but given how many big retailers have been shutting stores, it wouldn’t be surprising if Signet starts accelerating its store closings.

Until recently, Signet had been bucking the trend: It was opening more stores than it was closing. For instance, in fiscal 2017 (which ended in January of that year), its store count increased by 57.

But now with its sales increasingly falling, Signet, too, has been closing doors.

In the first three quarters of fiscal 2018, Signet closed 123 stores and opened 80, for a net loss of 43. In the U.S., it’s been particularly aggressive about closing regional Sterling names (21 shut), Gordon’s stores (10 shut), and Zales (39 shut, but 11 opened). In the case of Gordon’s, a legacy name, it’s basically whittled that nameplate down to nothing. According to its latest financial report, there are now only 32 Gordon’s stores. There used to be hundreds.

Expect this trend to continue. Signet currently numbers 3,600 stores; 3,000 of those are in the United States. Many of those U.S. stores are in malls. In quite a few shopping centers, Signet owns two or more nameplates.

That strategy made sense as long as malls were the dominant retail channel. But, in recent years, Signet has been focused on, and has been seeing better results from, off-mall locations. Last May, then-CEO Mark Light said that while only 6 percent of Signet’s sales came from off-mall locations, he expected that to eventually climb to 50 percent.

With many malls slowly dying or slated for closure, Signet is almost surely stuck in a lot of B- and C-rated shopping centers. I don’t think anyone will be surprised if it starts aggressively eyeing the exits.

JCK News Director