Signet Revenue Drops in First Quarter

RAPAPORT… Signet Jewelers has lowered its sales outlook for the rest
of the year, after revenue fell in the first fiscal quarter.

Total sales declined 3.3% to $1.43 billion in the three
months ending May 4, the retailer reported Thursday. Same-store sales —
at branches open for a year or more — slipped 1.3%.

Signet now expects sales of $6 billion to $6.06 billion for
the current fiscal year ending January 2020, compared with its previous
forecast of $6 billion to $6.1 billion. Same-store sales will decrease by 1.5%
to 2.5%, it predicted, whereas it previously estimated they would range from a
2.5% decline to flat.

“Given the sales trends we experienced year to date, and
softening retail traffic, we are narrowing our fiscal-2020 guidance, while
continuing to expect strong progress on cost savings across our business,” said
Signet CEO Virginia Drosos.

Sales in North America slid 3.5% to $1.3 billion, with
declines at Kay Jewelers (-1.4%), Zales (-4.4%) and Jared (-4.7%). Legacy
collections such as Ever Us and Le Vian recorded slowdowns, as did non-branded
bridal jewelry. Sales of new merchandise increased, with stronger performances
in the Enchanted Disney Fine Jewelry, Vera Wang Love, Neil Lane and Leo
collections.

The company is working on contingency plans to combat the
impact of potential 25% US tariffs on jewelry imports from China, Drosos said in
an investor call following the release of its results. The higher rate could
affect retail prices for its US customers, as China accounts for about 30% of
Signet’s merchandise spending, she noted.

E-commerce sales rose 5.3% to $154.3 million, contributing
about 11% of revenue, compared with 10% a year ago, the jeweler added.

The company’s net loss narrowed to $10 million for the quarter,
versus a loss of $496.6 million a year earlier.

Image: A Kay Jewelers store in New Jersey. (Shutterstock)