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Signet Cuts Forecast as Hurricanes Hurt Sales

Storms in Florida and Texas had negative impact on the jeweler’s earnings.
Nov 21, 2017 9:03 AM   By Rapaport News
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RAPAPORT...
Signet Jewelers’ sales fell in the third fiscal quarter due to hurricanes in the US and disruptions related to changes in the retailer’s credit services.

Group sales slipped 2.5% and same-store sales — at outlets open for at least a year — dropped 5% in the three months to October 28, the US-based jeweler reported Tuesday. The company now expects same-store sales for the full fiscal year ending February 3 to decline by a mid-single-digit percentage, from an earlier forecast of a low-to-mid-single-digit drop.

Hurricanes Harvey and Irma had a negative impact on consumer confidence in Texas and Florida in September, the state that the storms hit the hardest, according to Nielsen’s Consumer Confidence Survey for the month. As at January 28, Signet had 245 stores in Florida and 243 in Texas — the two largest states for the retailer, according to its latest annual report.

“In addition to an anticipated sequential slowdown in our same-store sales, unfavorable weather-related incidents, along with unexpected disruptions during the transition of our credit services, further negatively impacted results,” said Signet CEO Virginia Drosos. The credit-related problems were particularly significant at Signet’s Kay Jewelers brand, where sales fell 4.4% to $436.3 million.

Signet has begun outsourcing its credit portfolio to Alliance Data Systems and Genesis Financial Solutions, closing the first stage of the process in October. The transfer will mean those financial groups will manage services for consumers who wish to buy Signet products on credit.

The problems implementing these changes overshadowed improvements to “omnichannel” retail — the combination of offline and online selling — that resulted from Signet’s acquisition of R2Net, the jeweler added. The takeover of the owner of diamond e-tailer James Allen helped drive Signet’s e-commerce sales up 56% to $80.7 million, including $23.7 million from R2Net.

Total sales at the Sterling Jewelers division, encompassing Kay, Jared and R2Net, slipped 2% to $698.7 million. Sales at Zale declined 3.6% to $323.6 million, while UK sales dropped 1.5% to $128.4 million.

The company recorded a $3.9 million loss for the quarter, resulting from the sales drop and transaction expenses related to the R2Net and credit deals.

Signet’s stock dived 27% in early trading Tuesday.

Image: BravoKiloVideo/Shutterstock
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Tags: alliance data systems, consumer confidence, Consumer Confidence Survey, credit, credit portfolio, Florida, Genesis Financial Solutions, Hurricanes, James Allen, Jared, kay, Kay Jewelers, Nielsen, omnichannel, r2net, Rapaport News, Signet, Signet Jewelers, texas, Virginia Drosos, Zale
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