Signet Converting Most Ultra Stores to Kays

The Ultra Diamonds brand name may soon become a thing of the past.

Signet plans to convert most of Ultra’s 140 stores to Kay Jewelers Outlets, executives announced during a conference call following the release of the company’s financial results.

Signet completed its acquisition of Ultra in November.

The transitions to the new brand name have already begun and should be completed by mid-2014, executives said. Kay currently has 26 outlets; the company will have more than 100 when it has finished. William Montalto, former chief operating officer of Sterling Jewelers, Signet’s U.S. division, has rejoined the company as a consultant to assist with transitioning the Ultra stores.

In response to a question from an analyst, CEO Michael Barnes called the acquisition “a great strategic move.”

“In the channel of outlet malls, we have been running a poor third place [behind Zale and Ultra],” he said. “Acquiring 107 stores, we immediately become a major player in the outlet channel.… We know the outlet channel is a very strong and good business model, and we want to be a leader in that.”

As far as the Ultra stores that aren’t outlets, “they happen to be great stores in great locations,” Barnes said. “The plan will be to convert most them to Kay, but we are still looking at that.”

Barnes added that the company “sees an opportunity” in the company’s leased departments. It currently runs stores in the Burlington Coat Factory.

The company also announced the following financial results for the third quarter of fiscal 2013 (the 13 weeks ending Oct. 29):

  • Signet same-store sales: Up 1.4 percent from previous year
  • Signet total sales: $716.2 million, up 0.8 percent 
  • Signet e-commerce sales: $19.6 million, up 35.2 percent
  • U.S. sales: $575.6 million, up 2.2 percent
  • U.S same-store sales: Up 1.2 percent  
  • Kay same-store sales: Up 5.5 percent
  • Jared same-store sales: Down 4.1 percent
  • U.K. sales: $140.6 million, down 4.7 percent
  • U.K. same-store sales: Up 2.3 percent

The company said Jared’s same-store sales decline was primarily due to a one-time watch event in 2012 and its decision to part ways with Rolex.

Barnes added that Pandora, whose sales had been said to be slipping, “had shown some improvement.”

He also said that “November has been challenging,” in part because of Superstorm Sandy.

“Quite frankly, [the storm] did have a major impact,” he said. “We figure it probably cost us five to six million dollars in sales.”

The company also expects same-store sale growth “in the low single digits” for the fourth quarter.

Barnes also called the third-quarter earnings a “record” for the company.

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