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Signet Cuts Forecast as Hurricanes Hurt Sales
Nov 21, 2017 9:03 AM
By Rapaport News
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RAPAPORT... Signet Jewelers’ sales fell in the third fiscal quarter due
to hurricanes in the US and disruptions related to changes in the retailer’s
credit services.
Group sales slipped 2.5% and same-store sales — at outlets
open for at least a year — dropped 5% in the three months to October 28, the
US-based jeweler reported Tuesday. The company now expects same-store sales for
the full fiscal year ending February 3 to decline by a mid-single-digit
percentage, from an earlier forecast of a low-to-mid-single-digit drop.
Hurricanes Harvey and Irma had a negative impact on consumer
confidence in Texas and Florida in September, the state that the storms hit the
hardest, according to Nielsen’s Consumer Confidence Survey for the month.
As at January 28, Signet had 245 stores in Florida and 243 in Texas — the two
largest states for the retailer, according to its latest annual report.
“In addition to an anticipated sequential slowdown in our
same-store sales, unfavorable weather-related incidents, along with unexpected
disruptions during the transition of our credit services, further negatively
impacted results,” said Signet CEO Virginia Drosos. The credit-related problems
were particularly significant at Signet’s Kay Jewelers brand, where sales fell
4.4% to $436.3 million.
Signet has begun outsourcing its credit portfolio to
Alliance Data Systems and Genesis Financial Solutions, closing the first stage
of the process in October. The transfer will mean those financial groups will
manage services for consumers who wish to buy Signet products on credit.
The problems implementing these changes overshadowed improvements
to “omnichannel” retail — the combination of offline and online selling — that
resulted from Signet’s acquisition of R2Net, the jeweler added. The takeover of
the owner of diamond e-tailer James Allen helped drive Signet’s e-commerce sales
up 56% to $80.7 million, including $23.7 million from R2Net.
Total sales at the Sterling Jewelers division, encompassing
Kay, Jared and R2Net, slipped 2% to $698.7 million. Sales at Zale declined 3.6%
to $323.6 million, while UK sales dropped 1.5% to $128.4 million.
The company recorded a $3.9 million loss for the quarter,
resulting from the sales drop and transaction expenses related to the R2Net and
credit deals.
Signet’s stock dived 27% in early trading Tuesday.
Image: BravoKiloVideo/Shutterstock
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Tags:
alliance data systems, consumer confidence, Consumer Confidence Survey, credit, credit portfolio, Florida, Genesis Financial Solutions, Hurricanes, James Allen, Jared, kay, Kay Jewelers, Nielsen, omnichannel, r2net, Rapaport News, Signet, Signet Jewelers, texas, Virginia Drosos, Zale
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