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Private Equity Firm Invests $625M in Signet
Jeweler Cuts Guidance as 2Q Sales Fall
Aug 25, 2016 9:52 AM
By Rapaport News
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RAPAPORT... Signet Jewelers announced a $625 million investment from
private equity firm Leonard Green & Partners (LGP).
LGP will make the investment by buying convertible preferred
shares, with the proceeds going to finance a repurchase of up to $625 million
in common stock.
Signet, the world’s largest retailer of diamond jewelry,
will appoint Jonathan Sokoloff, one of LGP’s two managing partners, to its
board. This will come about after the deal is closed, which is expected in the
third fiscal quarter of 2017.
LGP, headquartered in Los Angeles, is a private equity house
with a track record of acquiring stakes in the U.S. retail and consumer sector.
Investments to date include burger-stand chain Shake Shack and retailer The
Container Store.
“For more than 25 years, Leonard Green has successfully
partnered with some of the best known companies in the retail sector and worked
to create significant shareholder value,” said Mark Light, Signet’s chief
executive officer (pictured).
“We view Leonard Green’s significant investment in Signet as
a strong vote of confidence in our business and its long term growth prospects.”
Meanwhile, in a separate statement, Signet announced a 2.6
percent decline in sales to $1.37 billion in its second fiscal quarter that
ended July 30. Same-store sales fell 2.3 percent. A 5.4 percent sales drop at
Jared outweighed a 0.7 percent increase at Kay, while revenue from the Zale
division rose marginally. Total sales in the U.K. division, comprising H. Samuel
and Ernest Jones, retreated 8.7 percent. However, profit jumped 32 percent to
$81.9 million.
Adjusting its outlook downward, the retailer now forecasts full-year
same-store sales will decline 1 percent to 2.5 percent, in contrast to an
earlier forecast of a 2 percent to 3.5 percent rise.
First-half sales crept up 0.4 percent to $2.94 billion.
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Tags:
ernest jones, H. Samuel, Jared, Leonard Green & Partners, LGP, private equity, Rapaport News, Signet, Signet Jewelers, Zale
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