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Signet Optimistic After Fourth-Quarter Rise

Mar 18, 2021 9:13 AM   By Rapaport News
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Signet Jewelers’ sales and earnings rose in the fourth fiscal quarter as e-commerce helped the retailer capitalize on a recovery in consumer demand.

Group sales increased 1.5% year on year to $2.19 billion for the three months ending January 30, which included the important holiday season, the company reported Thursday. Same-store sales — at branches open for at least a year — were up 7%, while net profit jumped 36% to $254.3 million.

Online sales rose 70% versus the same period a year earlier, contributing 23% of the total, Signet added. This compensated for weak brick-and-mortar traffic, especially in markets outside North America, where Covid-19 lockdowns continued to affect business.

The company, which owns the Kay Jewelers, Jared and Zales banners, among others, said it had achieved the goals it set three years ago in its turnaround plan, Path to Brilliance. It’s now embarking on a new strategy, Inspiring Brilliance, which focuses on innovation and sustainable growth.

“This quarter marked an important milestone for Signet, as our team delivered a strong fourth quarter and third year of the company’s Path to Brilliance transformation,” said CEO Gina Drosos. “These results reflect the exceptionally hard work and resilience of our Signet team members in a uniquely challenging time.”

As part of the new strategy, Signet will shift toward off-mall formats in response to changes to US shopping patterns that predated the coronavirus pandemic. The jeweler plans to shut more than 100 stores in the current fiscal year that began on January 31, and will open up to 100 new locations, mainly in “highly efficient kiosks,” it revealed.

Sales for the entire fiscal year dropped 15% to $5.23 billion, mostly because of a slump in the first half, when stores shut and demand plummeted. Signet incurred a full-year net loss of $15.2 million, compared with a profit of $105.5 million for the previous year.

The company expects this year’s first-quarter revenue to surge by up to 67% to between $1.42 billion and $1.46 billion, with same-store sales rising by 80% to 84%, reflecting the comparison with the peak of the Covid-19 crisis last year.

Full-year same-store sales will increase at a more modest rate, with revenue gaining up to 15% for a total of $5.85 billion to $6 billion, as the jewelry sector’s recovery will slow in the second half of 2021, Signet forecast. Same-store sales will climb 14% to 17%.

“Signet expects stronger sales performance in the first half of the fiscal year,” the company noted. “As the vaccine rollout progresses, there could be a shift of consumer discretionary spending away from the jewelry category toward experience-oriented categories, the magnitude and timing of which is difficult to predict.”

Signet’s share price was up 7% in premarket trading Thursday.

Image: A Jared store. (Signet Jewelers)
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Tags: COVID-19, Gina Drosos, Inspiring Brilliance, Path to Brilliance, Rapaport News, Signet, Signet Jewelers
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