Signet Jewelers reported mixed results for the third quarter of fiscal 2019 (ended Nov. 3) as comps rose, but it still posted a net loss.
While the 1.6 percent in comps topped analyst expectations, the profit number fell below them, and Signet’s stock fell following the news. The posted third-quarter $29.9 million net loss is wider than the $3.9 million loss Signet reported in the prior year’s third quarter.
Overall, third-quarter sales totaled $1.19 billion, up 3 percent from last year. North American comps rose 2.1 percent, but that was tempered by a 3.1 percent fall in comps at its U.K. division.
Flagship chain Kay saw same-store sales rise 0.7 percent—which is that banner’s first comp increase in more than a year. Piercing Pagoda was Signet’s best performer this quarter, posting a 16.2 percent jump in same-store sales. Comps at Zales rose 2.8 percent, but Jared’s were flat.
James Allen, the e-tailer Signet acquired last year, saw comps rise 13.6 percent—slower than previous quarters. “We expected [that] to happen,” said CEO Gina Drosos, on a conference call following the release of its financial results, “as we work through the implementation of sales tax in additional states.” James Allen now collects sales tax in 29 states and Washington, D.C., following the U.S. Supreme Court’s June ruling on remote sellers.
E-commerce sales accounted for 10.5 percent of Signet’s overall sales for the quarter, up from 7 percent last year.
Bridal and fashion sold best in North America, with the Enchanted Disney and Neil Lane collections posting particularly strong results. Watch sales rose, as did sales of diamond earrings and pendants. But bead sales fell, as Signet discontinued its proprietary bead brand.
To increase differentiation, all three U.S. Signet banners have refined their positioning this year. Kay’s campaign, “Long Live Love,” positions that chain as “the champion of modern love and gratitude,” said Drosos. Jared’s “Dare to Be Devoted” campaign “encourages customers to celebrate life’s greatest devotions with premium jewelry as unique as their love,” while Zales will highlight “style and self-expression with a bold energetic brand personality.”
Signet is also introducing new collections at all three banners: Kay has added the Love and Beloved collection and new Neil Lane designs; Zales has updated its Vera Wang Kindred Heart collection and will feature new Vera Wang bridal and Enchanted Disney designs; and Jared is stocking more large and fancy-cut diamonds, as well as a new Le Vian collection.
The company’s plans to cut $200 million from its budget this year is on track, Drosos said, as is its plan to close 200 stores. Most of those closures will be regional nameplates as well as stores in C- and D-rated malls.
Signet also plans to open 30 stores this year—including a new millennial-focused James Allen store that debuts tomorrow in Washington, D.C. Drosos says this store will be an opportunity to test new concepts and “think about the future store experience.”