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08/09/2022

Parent company of Zales buys digitally native Blue Nile

Marianne Wilson
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Signet Jewelers is acquiring Blue Nile for $360 million in an all-cash deal.

Signet Jewelers is making an acquisition to boost its online offerings and appeal to younger customers.

The parent company of Zales, Kay Jewelers, Jared and other brands will acquire online jewelry retailer Blue Nile for $360 million in an all-cash deal. Founded online in 1999, Blue Nile ships to 44 countries and is also expanding in the physical space, with about 20 showrooms in the U.S. The company’s assortment has grown from conflict-free diamonds to include earrings, necklaces, pendants, bracelets and other fashion items.

The acquisition will accelerate Signet's efforts to expand its bridal offerings and grow its “accessible luxury” portfolio while extending its digital capabilities. It will also bring a younger, more affluent and ethnically diverse customer base into Signet’s stable.

"Blue Nile is a pioneer and innovator in online engagement rings and fine jewelry, providing a unique and highly desirable shopping experience for customers," said Signet CEO Virginia C. Drosos. "Adding Blue Nile to our strong and diversified portfolio of banners will further drive our Inspiring Brilliance growth strategy - expanding customer choice, building new capabilities, and achieving meaningful operating synergies that will increase value for both our consumers and shareholders."

Blue Nile, which had revenue of more than $500 million in calendar year 2021, was acquired in 2017 in a $500 million deal by an investor group comprised of Bain Capital Private Equity, Bow Street and Adama Partners in a deal that took the company private. In June 2022, Blue Nile and Mudrick Capital Acquisition Corp. II. — a special purpose acquisition company — said they had agreed to combine in a deal that would have resulted in Blue Nile becoming a public company. But the deal fell through. CNBCreported that Signet had approached Blue Nile last year about an acquisition.

“By joining Signet, we will extend our premium brand and fine jewelry offering to millions of new customers while bringing new capabilities to our leading e-commerce business that will drive additional growth opportunities for Blue Nile," said Sean Kell, CEO of Blue Nile. "We're equally thrilled to join a purpose-inspired and sustainability-focused company that shares our core values and has been recognized as a certified Great Place to Work."

In other news, Signet cut its financial forecast for the second quarter and full-year fiscal 2023, citing “heightened pressure on consumers' discretionary spending and increased macroeconomic headwinds.”

The company now expects fiscal 2023 sales of $7.60 billion to $7.70 billion, down from a prior range of $8.03 billion to $8.25 billion. It expects non-GAAP operating income to be in the range of $787 to 828 million compared to its previous estimate of   $921 to 974 million. It expects second-quarter revenue of about $1.75 billion and non-GAAP operating income totaling roughly $192 million.

"We saw sales soften in July as our customers have been increasingly impacted by rapid inflation, so we're revising guidance to align with these trends,” said Drosos.