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RAPAPORT... Signet Jewellers Ltd. reported that revenue rose 52.7 percent year on year to $1.18 billion for the third quarter that ended on November 1, on a condensed consolidated basis that included the acquisition of Zale. Comparable-store sales across the group rose 4.2 percent. Revenue from the company's various online channels jumped 96.5 percent to $44.8 million. Cost of sales increased 56.4 percent to $832 million. The group recorded a loss of $1.3 million or 2 cents per share, during the quarter, down from a profit of $33.6 million last year, which was largely blamed on a Zale division loss of $13.2 million and incremental interest expense of $10.6 million related to the Zale acquisition. Gross margin fell to 29.4 percent of sales compared with 31 percent of sales one year ago, with this decrease also being attributed to Zale.  By division, Sterling Jewelers' same-store sales rose 6.8 percent year on year, with increases driven by fashion jewelry and bridal. The average transaction price across Sterling's brand stores rose 2.7 percent, while unit sales rose 3.7 percent. The Zale division's comparable-store sales fell 0.9 percent and the strongest product categories were fashion diamonds and branded bridal.
In the U.K., same-store sales rose 3.7 percent with strong demand for diamond jewelry and watches. The number of transactions, however, fell 2.9 percent at U.K. branded stores, but the average price of merchandise sold rose 6.3 percent. Cash and cash equivalents were unchanged at $87.6 million, however, the value of inventory jumped 62.6 percent to $2.7 billion. Mark Light, Signet's CEO, said that Kay Jewelers led same-store sales growth with an increase of 7.5 percent, followed by Jared at 6.5 percent. In addition, the U.K. division recorded the highest increase in comparable-store sales for any third quarter of the past seven years. Even with Zale's decline in same-store sale, Light reiterated that progress was being made to integrate the brand.
"In the short time period since owning Zale, we have been able to implement select initiatives to further the Zale Christmas business. We remain confident in our ability to meet our goal of $150 million to $175 million in cumulative three-year synergies from January-end 2015 to January-end 2018," Light added. In other news, Signet entered into a rough diamond supply contract with De Beers. Light explained that being a sightholder advances its strategic diamond sourcing efforts. Signet already owns a diamond cutting factory in Botswana where sights are held.
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