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Woes Continue for Signet as Sales Slide

May 25, 2017 10:16 AM   By Rapaport News
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Signet Jewelers’ sales dived in the first fiscal quarter amid negative publicity and a sluggish retail sector.

Group sales fell 11% to $1.4 billion in the three months that ended April 29, while same-store sales dropped 11.5%, the US retailer said Thursday. Profit slumped 52% to $70.3 million.

Signet’s quarter started on a bad note amid allegations in the media in February of widespread sexual harassment at its Sterling Jewelers division. Sales at this unit — which includes Kay Jewelers and Jared — fell 11% to $871 million, while revenue from the Zale division dropped 10% to $403.4 million.

“We had a very slow start to the year as continued headwinds in the overall retail environment were exacerbated by a slowdown in jewelry spending and company-specific challenges,” said Signet CEO Mark Light. “We continue to take decisive action to adapt our business to the current challenging retail environment and to position our company for long-term growth.”

The jeweler also blamed the later date of Mother’s Day, which occurred on May 14. Last year it was on May 8, meaning more of the sales relating to the holiday took place during the first fiscal quarter.

Sales at both Sterling and Zale were stronger in the higher-priced bridal and fashion-jewelry categories and weaker in lower-priced areas, with “off-mall” sales leading the Sterling figures.

The news came as Signet announced it was selling $1 billion worth of receivables — money it is due from products sold on credit — to Alliance Data Systems Corporation. The deal covers “prime” credit — that of customers with a strong likelihood of paying up. This means Alliance will pay off the accounts to Signet and take responsibility for collecting those clients’ debt. Signet is retaining its non-prime receivables, but outsourcing the credit functions for these accounts to Genesis Financial Solutions.

Payment programs for customers who do not qualify for Signet’s credit programs, or who opt out of buying on credit, will have access to a lease-purchase payment program from Progressive Leasing, a subsidiary of lease-to-own retailer Aaron’s, Signet said.

The move comes after claims last year that Signet was using its system of selling on credit to boost revenue.

Meanwhile, Signet’s share price fell 8% in pre-market trading Thursday but recovered as markets opened. Shares dropped 6.6% Wednesday on reports that analysts at Buckingham Research Group had downgraded the stock to “neutral” from “buy.” The stock value has gone down approximately 42% since the beginning of the year.
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Tags: Aaron’s, Alliance Data Systems Corporation, credit, Genesis Financial Solutions, Jared, Kay Jewelers, Mark Light, Mother’s Day, Progressive Leasing, Rapaport News, Signet, Signet Jewelers, sterling, Sterling Jewelers
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