Signet Jewelers comp-sales fall 14%; to pilot new Jared, Kay concepts
Signet Jewelers Ltd. reported declining first-quarter sales and cut its full-year guidance amid “increasing macroeconomic pressures” and a drop-off in engagements.
The parent company of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, Blue Nile and other jewelry brands said it expects current headwinds in engagements to recovery later this year (Signet is currently in fiscal 2024), and continue to rebound in fiscal 2025. (Bridal overall, inclusive of engagements, represents nearly 50% of Signet's merchandise sales.)
On the company’s earnings call, CEO Virginia Drosos said the retailer, which operates approximately 2,800 stores, expects to invest more than $100 million in its fleet to showcase its banners' “unique differentiators.”
“This includes expansion of new stores with proven formats in key markets, continued repositioning or closing of low-performing stores, important sustainability investments like LED lighting and modern HVAC, and cosmetic upgrades in key markets to bring more doors to brand standard, and deliver seamless banner experiences across channels,” she said.
Plans include the piloting of new accessible luxury Jared concepts as the brand continues to shift to higher price points, and accelerating the growth of Diamonds Direct to double the pace of store openings and allow for more exposure to the megastore model.
“And we are opening a number of new Kay modular concepts, which require lower inventory and build-out costs and delivered a very attractive return in our pilot,” Drosos added.
Signet’s adjusted earnings fell to $1.78 per share for the quarter ended April 29, from $2.86 a share in the year-ago period, but topped analysts’ estimates of $1.49 a share.
Total sales fell 9.3% to $1.67 billion. Same-store sales decreased 13.9%.
In the earnings statement, Drosos cited macroeconomic headwinds that worsened late in the quarter.
“In line with our predictions, there were fewer engagements in the quarter resulting from COVID's disruption of dating three years ago," she said. "As we look to the balance of the year, we're leaning in to leverage our differentiated capabilities, widen our competitive advantages, and drive market share gains.”
Signet said it was raising its cost-cutting target by $150 million as it deals with the “dynamic retail climate,” while maintaining strategic investments."
For fiscal 2024, Signet forecasts sales of $7.1 billion to $7.3 billion, down from its prior guidance of $7.67 billion to $7.84 billion. It expects earnings per share of $9.49 to $10.09.
Signet CFO Joan Hilson said the company updated fiscal 2024 guidance reflects a recent deceleration of trends that have persisted into the second quarter, including a softer than expected Mother's Day, increasing macro-economic pressures on consumers at more price points, and deeper competitive discounting.
"We built our fortressed balance sheet to strategically invest during periods of disruption,” she continued. “Our growing capabilities enable Signet to navigate this challenging macro environment, position us for success when the bridal recovery begins, and maintain strong margins while continuing to return capital to shareholders."
Signet operates approximately 2,800 stores primarily under the name brands of Kay Jewelers, Zales, Jared, Banter by Piercing Pagoda, Diamonds Direct, Blue Nile, JamesAllen.com, Rocksbox, Peoples Jewellers, H. Samuel, and Ernest Jones.