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RAPAPORT... Signet Jewelers reported that sales rose 44.9 percent year on year to $1.531 billion in the first quarter that ended on May 2. The increase was driven by the addition of Zale, which added $437.1 million to Signet's overall revenue. Same-store sales rose 3.6 percent and ecommerce sales jumped 98.7 percent to $76.9 million. Gross margin fell to 37 percent compared with 38.6 percent one year earlier, primarily due to lower gross margins with Zale. Profit rose 23 percent to $118.8 million. Across the company's Sterling Jewelers division, sales increases were driven by Kay and select diamond jewelry collections as well as watches. The average transaction price at Sterling increased by 4.7 percent, while the number of transactions fell 3 percent due to the company's merchandise mix, including bridal and higher price-point fashion collections. Sterling's same-store sales rose 2.3 percent. Zale division sales were given a boost from branded bridal and branded diamond fashion merchandise and comparable-store sales rose 5.6 percent. In the U.K., sales were driven by branded bridal as well as fashion diamond jewelry and fashion watches. The number of transactions and average transaction price in the U.K. increased by 2.6 percent and 3.6 percent, respectively. Same-store sales in the U.K. jumped 6.2 percent. At the end of the quarter, Signet held cash and cash equivalents of $122.6 million compared with $249.1 million on May 3, 2014. Net accounts receivable rose 14.7 percent to $1.5 billion. Net inventory was up 63.3 percent to $2.5 billion and long-term debt totaled $1.4 billion, though the company had no debt one year ago. Mark Light, Signet's CEO, said, “These results afforded us the opportunity to repurchase $21.9 million of Signet stock in the first quarter, in line with our capital allocation plan. We continue to see favorable progress of our integration of the Zale division. As we implement new operating initiatives and deploy incremental capital resources, the Zale division has begun, as expected, to grow its same-store sales faster than Signet overall. We expect this trend to continue and we remain well positioned to meet our goal of $150 million to $175 million in cumulative three-year operating profit synergies by the end of January 2018."
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