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Signet Adjusts Outlook as Sales Decline

Revenue dragged down by weak purchasing at Jared and Kay.
Sep 5, 2019 10:50 AM   By Rapaport News
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Signet Jewelers has modified its full-year sales guidance for the second time, following a drop in revenue in the three months ending August 3.

Group sales fell 3.9% to $1.36 billion in the second fiscal quarter, the retailer reported Thursday. Same-store sales — at branches open for at least a year — fell 1.5%, as the company changed its promotions schedule at Jared branches, and recorded revenue from its service plan outside the quarter, it explained.

The company had positive same-store sales growth at Zales and Piercing Pagoda, which partially compensated for declines at Kay and Jared. Fashion jewelry was the strongest category, increasing 2% in the second quarter, while bridal slipped 5%, and watches dropped 10%.Total e-commerce proceeds rose 4.4%.

The company reported a net loss of $44.3 million, compared with a loss of $31.2 million during the same period a year ago.

Signet now expects sales of $6 billion to $6.03 billion for the current fiscal year ending January 2020, compared with its previous forecast of $6 billion to $6.06 billion. Same-store sales will decrease by 1.5% to 2.5%, it predicted. The previous figures were already lowered following the first-quarter results. 

The jeweler in 2018 launched its Path to Brilliance initiative, a three-year program to restore growth with cost savings of $200 million to $225 million. The company is planning to close approximately 150 stores during the current fiscal year, having already reduced its store-count by 13% since 2018. Signet will cut costs by $70 million to $80 million this year, it said.  

In light of those savings, the company raised its earnings outlook for the year to a projection of $2.91 to $3.23 per share, from $2.88 to $3.17 previously held.

“As we enter the competitive holiday season, we believe we are positioned to execute our product strategy by launching additional flagship brands, delivering relevant on-trend new merchandise and offering a highly competitive assortment for value-oriented shoppers,” said Signet CEO Virginia Drosos.

Signet shares jumped 28% in early trading on Thursday, as investors were encouraged that sales beat analyst estimates.   

Image: A jewelry box from Jared. (Flickr)
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Tags: James Allen, Jared, kay, Rapaport News, Signet, Signet Jewelers, Virginia Drosos, zales
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