Signet’s comps for the nine-week holiday season fell 5.3 percent, which the company blamed on its ongoing transition to outsourced credit.
Total sales declined 3.1 percent.
The credit transition particularly hurt sales at its Sterling division, home of Kay (where comps fell 10.8 percent) and Jared (comps down 5.9 percent).
“For many years, our store team members were seamlessly utilizing credit to support the selling process,” said chief financial officer Michele Santana on a conference call following the release of its financial results. “With the outsourcing transition, some aspects of these credit operations have changed…We significantly underestimated the impact these changes would have on in-store behaviors.”
She added later, “It’s going to take time to move us past the impact of the transition.”
Afterward, in response to a question, she said that the problems were mostly the result of the new procedures, and provider Alliance Data Systems did not “overall” change the company’s lending standards.
Signet’s Zale division, which already outsources its credit and did not have to contend with a disruption, did far better over the holiday period, boasting a 4 percent comp gain. Same-store sales rose 4.6 percent at its Zales chain and 4.9 percent at Piercing Pagoda, though they fell 12.6 percent at Gordon’s.
Comps at its two U.K. chains (H. Samuel and Ernest Jones) fell 10.3 percent; same-store sales at its two Canadian chains (People’s and Mappins) fell 2.4 percent.
Comps at newly acquired R2Net/James Allen grew a significant 38 percent.
On the conference call, CEO Gina Drosos singled out numerous strong retail performers, including its new Enchanted Disney collections; line extensions in Vera Wang Love; its Chosen collection at Jared, particularly its new fancy–cut collection; and its new fashion assortments.
But sales of its Ever Us line declined.
“It’s in a lifecycle of the mature product and still was very strong,” said Drosos. “It still is [among] our strongest brands in the portfolio, but just not nearly as strong as last year.”
She added there is “no evidence Zales cannibalized Kay” during the holiday season. Traffic at malls, she said, continued to be challenged.
This is the second year in a row a technical snafu disrupted Signet’s holiday. Last year, it blamed technical problems at its e-tail sites for a decline in holiday sales.