Signet Surprise: 3rd Quarter Shows Better Sales

Signet Jewelers released “better-than-expected” results for the third quarter of fiscal year 2020 (ended Nov. 2)—with comps rising and a smaller-than-forecast loss.

“While we remain mindful that we still have more work to do, we are pleased with the progress of our Path to Brilliance transformation efforts,“ said chief executive officer Gina Drosos in a conference call following the release of its financial results.

Same-store sales rose 2.1% in the quarter, the first time the retailer has posted positive comps this fiscal year. It still expects comps to fall 1%–1.7% for the year.

Sales rose in Signet’s three mall-based banners—Kay (3.8%), Zales (2.8%), and Piercing Pagoda (12.4%)—as well as e-tailer James Allen (15.8%). This stands in contrast to the prior quarter, when only Zales and Piercing Pagoda showed positive growth.

Sales fell at Jared (2.4%), Canadian chain Peoples (4.2%), its U.K. division (5.2%), and its regional banners (16.4%).

Total sales were $1.19 billion for the quarter, down 0.3% over last year. The company posted a $43.7 million loss for the period, a larger loss than last year’s $38.1 million.

Brick-and-mortar sales rose 0.9%, and e-commerce sales rose 11.4%. E-commerce sales now represent 11.7% of the company’s total.

Kay’s performance was driven by a decision to “accelerate inventory reduction”—meaning more clearance. James Allen’s return to positive comps was driven by a “new merchandise assortment and new site enhancements,” as well as “beginning to lap the implementation of sales tax,” Drosos said.

Piercing Pagoda has now posted its sixth consecutive quarter of positive comps. It plans to open 11 new kiosks in top-performing malls, Drosos said, and has just launched its first-ever advertising campaign.

Sales at its U.K. division were negatively impacted by “concerns over Brexit,” she added.

North American bridal and fashion both grew, with strong sales in the Neil Lane, Vera Wang, and Leo collections. Fashion growth was led by gold, the Love + Be Loved collection, and Disney-brand items.

Drosos said the company is implementing strategic changes to its marketing model—to an “always on” model that will drive bridal throughout the year.

Drosos has also hopes to grow Signet’s “services business,” including repairs and piercing. It is adding piercing services in 400 Kay stores in the fourth quarter, she said.

“We expect piercing to be more meaningful over time as we further scale our efforts,” she said.

She said that Black Friday sales came in as expected, and Cyber Monday sales did particularly well.

Tariffs remain an issue for the company, but the company now has “low-teens exposure” to Chinese goods, said chief financial officer Joan Hilson on the call. She said she does not expect the tariffs to be “material” to its fiscal outlook.

(Image courtesy of Signet Jewelers)

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JCK News Director