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Signet Doesn’t See Any More Major Acquisitions


Signet’s buying spree appears to be over.

Since 2017, when CEO Gina Drosos took over, Signet has purchased four companies—James Allen, Blue Nile, Rocksbox, and Diamond Direct—for a combined total of over $1 billion. (That’s on top of its 2014 purchase of Zale for $1.4 billion.)

But at an investor day, held April 18 at the New York Stock Exchange, Drosos said she doesn’t expect any more big purchases.

“We don’t see another big M&A on the horizon—maybe smaller, complementary efforts,” she said.

After the presentation, Joan Hilson (pictured), the company’s chief financial and strategy officer—who recently had chief services officer added to her title—spoke with JCK.

During your presentation, you talked about increasing vertical integration.

We are partially vertically integrated already. We are a sightholder with De Beers, and we have diamond plotting, cutting, and polishing facilities in Botswana. So we’ll use our diamonds to build a product of jewelry, or use a mounting that’s created by our vendor.

Is that something you are looking to expand?

We’ll evaluate that opportunity, and believe it could be a potential opportunity for margin expansion.

You said lab-grown diamonds haven’t hurt your average order value. But isn’t that a possibility, as the price keeps falling?

We want the customer to lead on that, and we offer product the customer is responding to. It currently doesn’t represent a big part of our business.

There was a lot of talk today about “accessible luxury,” and how you see that as a major opportunity. Signet’s four accessible luxury brands—Blue Nile, Jared, Diamonds Direct, and James Allen—have historically been male-oriented, yet a growing part of the accessible luxury category is the female self-purchaser. How do you attract her to those brands?

It depends a lot on who the customer is, and the demographic of that customer. Blue Nile gets a younger, more affluent customer. Jared is more of a traditional, more extravagant gift-giving brand.

[Female self-purchasers] can go to any of our banners. They can go to Banter by Piercing Pagoda. Zales gets a high self-purchasing customer, Kay has fashion, and does self-purchase as well. I think it spans our portfolio.

Who do you consider your biggest competitors?

Our biggest competitor is independent jewelers, who comprise over two-thirds of [the U.S. jewelry retail] business. We see department stores as competitors but we are taking market share from them. Costco competes at the higher end for us.

Signet is located in three markets: the United States, Canada, and the United Kingdom. Have you ever thought of expanding elsewhere?

Interesting question. We see a lot of opportunity in the markets that we are in. Our U.K. banners are a year or so into their transformation, and that’s going very well for them. But we are very focused on the geographies that we’re in.

You have said you no longer consider Signet a mall brand. Can you talk about that?

We are not a traditional mall retailer. We are bringing to our customer a unified retail experience, through a mix of a physical fleet and an online presence, that lets the customer shop wherever they want to shop.

Eighty percent of our in-mall presence is in A-B malls. We only have 10% of our fleet in C locations, but those are highly productive.

Our off-mall strategy is 40% of our fleet, and it’s been a significant growth opportunity. And what we see there is better economics, higher top-line growth.

I know you’re focused on services, like repairs, customization, and warranties. How has that worked out?

It’s been highly successful. Repair is doing well. Our warranty plans are doing really well, with attachment rates increasing. We have a 72% attachment rate, on average. As we see engagements growing and bridal recovering, we expect to see even more growth.

With repair, our NPS [net promoter score] is 64%, up 11 points, so that has significantly improved. We have significantly improved that experience for the customer, and we have increased the turnaround time to about four days. We see that as a continued growth opportunity. We have capacity for 6.4 million repairs. Just in our network today, we serviced 4 million repair jobs. We believe we are poised for significant growth, and a nice element of that will be business-to-business repairs.

How does the jewelry market keep the big gains it made during COVID?

We have said we expect a mid-single-digit decline in the jewelry industry in the coming year. We would expect over next couple of years the industry will return to more normalized growth rates.

Since bridal is 50% of our business, we believe there wasn’t a COVID story there, because during COVID, engagements remained at consistent levels. Now we are seeing declines in engagements [due to lack of dating during COVID]. We believe [the number of engagements] will take three or four years to recover.

What we find interesting is that the fashion business has maintained its penetration in our overall business. While transactions have been down, we have been able to offset that through average transaction growth.

We believe that with what we’re putting into place, bridal is a key element of growth. We see services as a key element of growth, and we see accessible luxury as a key element of growth.

(Photo courtesy of Signet Jewelers)

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By: Rob Bates

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