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Signet Sales Jump as Holidays Start Early

Dec 3, 2020 10:34 AM   By Joshua Freedman
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Signet Jewelers saw its first quarterly sales increase in two years as innovations helped the company capitalize on a release of pent-up demand and early holiday shopping.

Revenue rose 9.5% year on year to $1.3 billion for the third fiscal quarter ending October 31, the US retailer reported Thursday. Same-store sales — at branches open for at least a year — jumped 15%, while net profit stood at $9.3 million, compared with a loss of $35.5 million a year earlier.

Zales led the growth, with sales at the Signet-owned brand rising 13%. Revenue at Kay gained 4% and at Jared climbed 10%.

Signet’s CEO Gina Drosos attributed the growth to improvements to its products, marketing and digital operations, the reopening of stores, and efforts to attract customers early in the season to avoid heavy traffic in December. Same-store sales in physical locations rose 6.8%, while e-commerce revenue soared 71% to $238.8 million.

“The capabilities they’ve built up virtually, and the financial flexibility they provide consumers, are factors that most jewelers across America cannot match or scale quickly enough,” commented Tim Vierengel, an analyst at Northcoast Research, noting that Signet had outperformed other jewelers for the quarter. “Most jewelers that we survey who don’t have a ‘shop online and pick up in-store’ option do not expect to survive in this new environment, as traditional foot traffic has all but evaporated.”

The company updated its range of jewelry in line with customer preferences, launching new products and offering more customization, Signet explained. The retailer benefited from an increased focus on digital and influencer marketing and expanded payment options for digital customers, including accepting Apple Pay and Google Pay. It also launched online consultations and virtual experiences that mimic being in a store, as well as new ways of presenting merchandise on the web.

As a result, bridal sales climbed 13% to $612.5 million, with revenue from fashion jewelry up 16% at $420.2 million.

Revenue fell 24% to $3.04 billion in the first nine months of the fiscal year as stores shut from March 23 until May. The company’s net loss for the period more than tripled to $269.5 million, from $81.6 a year ago.

However, the third-quarter momentum continued into November, with same-store sales growing around 3% year on year for the month. During the Thanksgiving weekend that ended Monday, same-store sales dropped by a low-single-digit percentage as brick-and-mortar traffic weakened.

The impact of the pandemic on sales will be more significant in December than in November, the company warned, prompting it to maintain its recent practice of withholding financial forecasts.

“Since Signet’s strongest holiday weeks have historically been the two weeks prior to Christmas, the company believes same-store sales could be negatively impacted in December as a result of weaker retail-store traffic trends, Covid-19 social-distancing capacity constraints, and store closures due to virus trends,” the jeweler noted.

Image: A Kay Jewelers store. (Shutterstock)
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Tags: Apple Pay, Bridal, christmas, Fashion jewelry, Gina Drosos, Google Pay, holiday season, holiday shopping, holidays, Joshua Freedman, Rapaport News, Signet, Signet Jewelers, Thanksgiving, Tim Vierengel, zales
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