Signet announced its comp sales rose 5 percent this holiday, with strong gains from its Kay and Jared brands.
For the eight weeks ending Dec. 28, comps at Kay and Jared both rose 5.6 percent, though same-store sales at its regional brands fell 2.3 percent. Overall, U.S. comps rose 4.9 percent.
“The regionals always underperform Kay’s, but they are very profitable and cash-generative,” said chief financial officer Ronald Ristau in a conference call following the release of the results. “We expect over time that the number of stores will fall to about 100 [from 180], but they will be 100 profitable and cash-generative stores.”
He said that the company is trying to beef up sales at those stores, which don’t have the same advertising support of Kay and Jared, by getting them websites and improved technology.
The United Kingdom division showed a turnaround, boasting a 5.2 percent increase after years of declines. Sales at H. Samuel rose 3.3 percent, and Ernest Jones rose 8 percent.
The company did lower its guidance regarding fourth-quarter and fiscal-year gross margins and profitability, due to what it called a “highly promotional retail environment [with] challenging customer traffic trends and lower-than-anticipated commodity cost savings.”
CEO Michael Barnes said that while Signet did not actually increase its own promotions, it did allow teams “a little more leeway in discounting at the store.” He added it was done mostly “during slow traffic times [to] boost conversions,” singling out the first two weeks of December as a period with less-than-expected traffic.
“[The environment] was more promotional than we would have been expected,” he said. “As we moved into December, everyone was seeing declining traffic, and everyone was fighting for conversion.”
Otherwise, Barnes had mostly good words for Signet’s sales.
“We feel we are performing very well out there, given the environment we were in,” he said. He singled out watches and brands as particularly strong his holiday, with beads seeing “double-digit increases.”
Ristau also praised the company’s outlet business, which has been boosted by its 2012 purchase of Ultra Stores.
“Comps were very strong in the outlet business,” he said. “We were very pleased.”
E-commerce was also strong, he said, boasting a 25 percent increase.
“We want to best in class, not just in e-com, but in the digital ecosystem,” Barnes said. “We are not going to let off the pedal on that.”