Signet Jewelers, owner of the U.S chains Kay Jewelers and Jared, announced it is expanding some of its successful brands, and is buying diamonds direct from miner Rio Tinto.
In an Aug. 23 conference call following the release of its financial results, the company announced a slew of new brands, including “Neil Lane Design,” a fashion line which builds on its Neil Lane Bridal offering, to be sold at both Kay and Jared, and a “Family Collection” that expands upon the Jane Seymour “Open Hearts” line. The company is also introducing “Shades of Wonder,” featuring natural colored diamonds from Australia, and is testing a line of blue diamond jewelry.
CEO Michael Barnes also noted that Jared has added five TAG Heuer shop-in-shops, which have been “very successful,” and is planning 14 more.
The company further announced that it has been appointed a Rio Tinto Select Diamantaire, meaning it sources rough direct from the diamond miner.
“We are now buying rough diamonds directly, and having the stones marked, cut, and polished on a contract basis,” said Barnes. “Our objective is to secure additional, reliable, consistent supplies of diamonds.”
Later Barnes called the Rio Tinto designation a “step in the right direction” but didn’t think it would impact the company’s results in the near future.
“Over a long period of time, we do feel like it will help us,” he said. “It’s still a relatively small business, and you would have to build up to some level of scale to see an impact, and that’s a ways away right now.”
Last year, Signet appointed Clark McEwen, a former Rio Tinto executive, as senior vice president of strategic diamond sourcing.
The company also said it plans to introduce new Kay and Jared websites, and is making a push in social media.
“Our intention is to be absolute best in class in e-commerce sales, and our digital sales in general,” Barnes said.
Chief financial officer Ron Ristau estimated the company’s current U.S. market share as 10.4 percent.
The company also announced strong results for the second quarter of fiscal 2013, with same-store sales rising 7.1 percent, and operating income up 8.4 percent.
The increase was spearheaded by strong results at its Kay chain, where same-store sales soared 12.5 percent. Sales at Jared rose a more modest 2.4 percent, which the company attributed to the exit of Rolex and “slowing Pandora sales.”
“Pandora is a very large and somewhat mature business for us,” Barnes said. “Pandora is one of our largest brands at Jared, but we did have some weakness there.”
“As we get new product innovation from them, we hope to drive that business in the future,” he continued.
Sales at Signet’s U.S. regional stores climbed 3.1 percent. The U.S. division’s sales jumped 8.2 percent overall, while sales in the U.K. division increased 2.1 percent. Barnes said the U.K. results “exceeded our expectations.”
Overall, Barnes concluded, “We had a good second quarter, and remain excited about the outlook for the second half.”
Other highlights of Signet’s financial statement:
- Kay sales: $418.6 million, up 13.9 percent
- Jared sales: $222.4 million, up 2.4 percent
- Overall U.S. sales: $701 million, up 9.2 percent
- Operating income: $110.9 million, up 8.4 percent
- Operating margin: 13.0 percent
- Diluted earnings per share $0.85, up $0.09