Signet Opening Dozens of New Stores, Reevaluating Credit Portfolio

The jewelry giant sees strong results from Kay and Piercing Pagoda, as well as Ever Us, bracelets, bangles, and branded bridal

Signet plans to open dozens of new stores in the next year, including 60–70 Kays, 8–10 Jareds, 30–35 Jareds, and 35–40 Piercing Pagodas.

The jewelry chain also announced that it has hired Goldman Sachs to help rethink its credit portfolio, presumably in response to growing doubts about the company’s credit and accounting methods.

“We’re a business and constantly looking for ways to improve, and credit is no different,” said chief financial officer Michele Santana in a conference call following the release of its financial results. “We’re looking at a variety of options.… It’s a top priority for us.”

Given the mixed retail climate, the company posted good results for the first quarter of fiscal 2017 (ended April 30), with overall comps rising 2.4 percent, led by strong results from Ever Us, bracelets, bangles, and its leading branded bridal lines (Neal Lane, Vera Wang).

It also plans to test new lines of Vera Wang fashion diamond and pearl jewelry; broaden the Ever Us two-stone line to include new ring styles, necklaces, bracelets, and earrings; sell a larger collection of Pandora products, including fashion jewelry; and expand its Chosen diamond line in Jared.

Despite some unflattering press coverage—which has bubbled up again in recent days—flagship chain Kay posted a 4.7 percent rise in comps.

Piercing Pagoda—purchased as part of Zale Corp.—showed a strong 5.6 percent comp gain, which Light attributed to greater stocking of higher-value product, including 14k gold and diamonds.

Jared’s same-store sales fell 1.7 percent in the period, but Light said he is still “bullish” on the chain’s prospects, though Signet is refining its model, with new sales tactics, more promotions, increased radio advertising, and a greater emphasis on lower-price fashion as well as designers like Vera Wang.

Zales’ comps rose 2 percent. Legacy chain Gordon’s—also under the Zale umbrella—saw sales sink 9.3 percent.

Despite a fall in mall traffic and downbeat results from competing retailers, Light said the U.S. consumer remains “vibrant.”

“We’re seeing decline [in mall traffic] as everybody else is seeing a decline,” he said. “We have some traffic counters in our Jared stores, some in our Kay stores, and we’re seeing declines but not as much as you’re seeing with some of the third-party providers out there…. [Bridal jewelry] is a premeditated purchase, and people are coming into our stores thinking about bridal shopping beforehand. So we don’t believe we’re as affected by retail traffic in jewelry as our retail competitors, but there is an effect, obviously, if there are less people in the malls.”

He also dismissed Macy’s efforts to upgrade its jewelry offerings.

“We shopped the stores that we believe are being tested,” he said. “And we believe we have a tremendous competitive advantage against all of our competitors, including Macy’s and other department stores. When you just look at our assortment, whether it is in gift-giving products and fine jewelry or, more importantly, in engagement and bridal category, our assortment is far beyond anybody else out there. And in this category, as I stated, the customer engagement is critical. The experience that they have in the stores is critical. We believe that our team members out in our stores are better trained and better equipped to educate our customers on this critical emotional purchase and educate our customers [about the] quality of the diamonds and understanding their needs.”

The company also said that diluted earnings per share grew 26.4 percent to hit $1.87, a new record.

 

JCK News Director