Signet Jewelers Ltd. is looking to attract younger consumers with its purchase of a direct-to-consumer, bridal-focused jewelry retailer.
The parent company of Key Jewelers, Zales, Jared and other banners has entered into an agreement to acquire Diamonds Direct USA Inc. for $490 million. The all-cash acquisition is expected to close in the fourth quarter.
Based in Charlotte, N.C., Diamonds Direct operates 22 stores in addition to an e-commerce site. After the transaction is completed, Diamond Direct’s leadership team will remain in place, with president Itay Berger reporting to Signet CEO Virginia Drosos.
“The accretive addition of Diamonds Direct to our portfolio will further drive shareholder value with its distinct bridal-focused shopping experience and add a new entry point as we build lifetime customer relationships and strive to reach our $9 billion revenue goal over time," said Drosos. "The Signet team continues to deliver strong business performance as part of our Inspiring Brilliance growth strategy. We are executing on our strategic priorities and investing in our business, while also returning cash to shareholders through our previously announced reinstated dividend and share buy-back program."
With its results-to-date exceeding expectations, Signet said it was raising its guidance for the fiscal third quarter and for the year on continued strong business momentum. The retailer cited high consumer demand ahead of the holidays. It also noted it is not experiencing any supply chain disruption since it uses air freight versus ocean freight to transport most of its merchandise.
“Customers are showing positive response to our new product launches, and the reduction in government stimulus and customer shift to spending on entertainment and travel are having less impact than we previously anticipated," said Joan Hilson, CFO and chief strategy officer. "While there remain factors beyond our control, our strengthened supply chain and vendor partnerships gave us the ability to plan earlier receipt of holiday product, and we currently do not expect any material supply chain disruptions. Signet uses air freight for the transit of the vast majority of our merchandise, thus avoiding current ocean freight congestion."
Signet now forecasts third-quarter revenue between $1.42 billion to $1.45 billion, up from a previous range of $1.26 billion to $1.31 billion. For the year, it expects revenue to be between $7.04 billion and $7.19 billion, up from prior guidance of $6.80 billion to $6.95 billion.
The company said it remains on track to close more than 100 locations this year and open 100. The majority of the new sites will be under its Banter by Piercing Pagoda banner.
Signet operates approximately 2,800 stores primarily under the name brands of Kay Jewelers, Zales, Jared, H. Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com and the jewelry subscription service, Rocksbox.