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Signet to Buy James Allen for $328M
Aug 24, 2017 8:43 AM
By Rapaport News
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RAPAPORT... Signet Jewelers will acquire the owner of online jewelry
retailer James Allen for $328 million, the companies announced Thursday.
Signet will purchase R2Net in an all-cash deal, taking
control of both JamesAllen.com and Segoma Imaging Technologies, which creates
3D displays of diamonds and jewelry for consumers buying on the web. With plans
to implement R2Net’s technology across its own retail platforms, Signet expects
the positive impact of the takeover to outweigh its costs within the first
year, it said.
“This is a highly strategic acquisition for Signet,” said
Virginia Drosos, the US jewelry giant’s CEO. “The James Allen brand and R2Net’s
technologies and innovative approach present a unique opportunity to rapidly
enhance our digital capabilities and create a distinctive customer shopping
experience which more seamlessly integrates our digital and physical retail
platforms.”
Signet and R2Net will “redefine the jewelry shopping
experience” and help Signet improve the way its online and offline selling
platforms work together, she added.
R2Net’s headquarters are in New York, with innovation
centers in Israel and customer-service operations in Frederick, Maryland. It
boasts proprietary 360-degree diamond-display technology, in addition to a
virtual ring sizer and a mobile application for trying on rings.
“By joining forces with Signet, we
believe we will be able to accelerate the growth of JamesAllen.com and
our adjacent R2Net businesses while continuing to build on our unique
culture and technology,” said Oded Edelman, who co-founded R2Net in 2006
along with James Schultz, Michele Sigler and Dean Lederman.
R2Net brands will mainly operate as an independent division
of Signet under its current leadership. Edelman will remain president of James
Allen and become Signet’s chief digital-innovation adviser, reporting directly
to the CEO. Edelman and the other founders of R2Net have agreed to invest a
portion of their transaction proceeds in Signet shares, Signet said.
Signet expects to complete the transaction in late
September, subject to certain conditions and regulatory approval. Signet is
receiving a loan from JPMorgan Chase Bank to finance the takeover and plans to
repay it by the end of fiscal 2018.
The retailer has struggled with digital sales of late. Overall
performance during the most recent holiday season was sluggish, partly as a
result of its e-commerce sites failing to cope with the high levels of traffic.
The company shuffled some of its senior management earlier this year and
brought in new faces to shake up its IT operations and improve its digital
strategy. Drosos, who took over as CEO at the beginning of this month, has said
she intends to make Signet more “innovative, digital-first and data-driven.”
Signet announced better results Thursday, crediting improvements
to its e-commerce platforms and a strong Mother’s Day, among other factors. Revenue
rose 1.9% to $1.4 billion in the second fiscal quarter, which ended July 29,
while same-store sales grew 1.4%. E-commerce sales jumped 18% to $82.2 million,
while group profit increased 14% to $93.4 million.
However, the jeweler’s first-half
sales — for the 26 weeks to July 29 — fell 5% to $2.8 billion, with profit
sliding 25% to $171.9 million.
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Tags:
James Allen, r2net, Rapaport News, Signet, Signet Jewelers
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