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Signet's Same-Store Sales Rise 4% in U.S., 8% in U.K.

Zale Division Sales Decline

Mar 26, 2015 8:30 AM   By Jeff Miller
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RAPAPORT... Signet Jewelers Ltd. reported that sales rose 45.5 percent year on year to $2.276 billion in the fourth quarter that ended on January 31 and included the Christmas season. The increase was mainly due to Zale's contribution of $636.7 million. Signet purchased Zale in May 2014. One year ago, Zale reported revenue of $656.4 million for the same period. Signet group's cost of sales surged 49.1 percent to $1.364 billion and profit rose 30.1 percent to $228 million.

Signet's adjusted gross margin during the fourth quarter was reduced to  40.9 percent of sales compared with  41.5 percent of sales due to the addition of Zale, which  operates with a lower gross margin structure than the Sterling division.

Same-store sales across the group improved 4.2 percent, which included revenue from the group's ecommerce channel and that jumped 89.4 percent to $149.6 million.  Comparable-store sales across the Sterling division, which includes Kay, Jared and regional brands, rose 3.7 percent in the fourth quarter and the Zale division also improved by 3.7 percent. U.K. division same-store sales jumped 7.6 percent.  

Shoppers purchased bridal and higher-priced fashion diamond collections across the Sterling brand jewelers, with the average transaction price up 4.5 percent, while the number of unit sales fell 1.2 percent. At Signet's Zale division, consumers shopped bridal and branded diamonds, but total sales were negatively affected by a deferred revenue decrease of $12.8 million, according to the company. In the U.K., diamond sales and watches were strong with the average price per transaction up 1.6 percent, while unit sales jumped 7 percent.

Signet's fiscal year sales increased 36.3 percent to $5.736 billion, while the cost of sales rose 39.3 percent to $3.662 billion. The group's profit improved 3.6 percent to $381.3 million. The value of inventory increased 63.9 percent year on year to $2.439 billion.

Signet operated 3,579 stores as of January 31. During the past 12 months, Signet opened 75 locations across its Sterling division and closed 42. There were 12 new openings for the Zale division but 54 store closures. In the U.K., Signet opened eight new locations and closed three.

Michele Santana, Signet's chief financial officer, said, "Confidence in our business model and the strength of our free cash flow enables us to commit to a comprehensive capital allocation strategy that provides for sustained revenue growth together with meaningful returns to our shareholders. We will continue to target investment-grade ratings and up to a 3.5-times adjusted leverage ratio. In addition, as part of our capital allocation strategy for fiscal year 2016, we plan to repurchase $100 million to $150 million of our stock and increase our dividend."


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Tags: Bridal, closures, comps, Jeff Miller, jewelers, sales, Signet, unit, Zale
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