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Signet Cautious for 2017 as Sales Decline

Mar 9, 2017 10:20 AM   By Rapaport News
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Signet Jewelers expects same-store sales to decline in the coming year as it adjusts to competitive pricing in the jewelry sector and changing consumer behavior.

The company predicts that fiscal 2018 same-store sales will decline by low-to-mid-single digits, with earnings per share projected at $7 to $7.40, compared to $7.13 last year.

“We are adapting to a challenging retail environment and weak mall traffic,” said Marc Light, Signet’s chief executive officer (pictured).

Group sales fell 5 percent to $2.27 billion during the fourth quarter, which ended January 28, while same-store sales declined 4.5 percent. Net income grew 9 percent to $297.5 million, largely due to reduced expenses and lower taxes.

Sales at Sterling Jewelers in the U.S., which includes Kay and Jared stores, fell 4 percent to $1.4 billion, with the number of transactions declining 11 percent and the average transaction value increasing 7 percent. Sales at Zale dropped 2.5 percent to $638.6 million. The company noted increased promotional activity among independent jewelers and department stores, which took away some of its market share.

Sales fell across most merchandise categories and collections, particularly at mall locations, Signet reported. Select categories did well, including diamond fashion jewelry, with earrings and bracelets being the strongest products. As for its collections, Ever Us sales more than doubled, Light said, while Neil Lane and Endless Brilliance also performed well.

Self-purchasing by women drove sales in fashion jewelry, he added.

Ecommerce sales fell 3 percent to $161.8 million, with a weak performance during the Christmas selling season prompting the company to rethink its online presence.

“We have realigned our executive organization structure to sharpen our focus on our customers’ channel preferences. And we are making greater technology investments to improve customers’ online experience,” Light said.

The company made new appointments to oversee its customer engagement and is updating its online selling platform for launch later this year, he reported. The company is also planning to close 165 to 170 stores, mainly across its mall-based regional brands, and to open 90 to 115 new off-mall locations, primarily Kay.

Signet’s full-year sales fell 2 percent to $6.41 billion, while net income grew 16 percent to $531.2 million for the fiscal year that ended January 28.

The company’s shares rose 6.5 percent in early trading in New York on Thursday morning following the announcement. The shares have slumped 32 percent since the beginning of the year as allegations have surfaced about sexual harassment and discrimination at its Sterling division. The company has set up a new board committee focused on respect in the workforce that will focus on programs and policies to support the advancement and development of women employees.

“We do not tolerate discrimination or harassment of any kind, and we want to be sure that the framework we have in place for reporting and responding to any such issues is robust and effective,” said company chairman Todd Stitzer.

Main image: Newscast
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Tags: diamonds, Jewelry, Kay Jewelers, Marc Light, Rapaport News, Signet Jewelers, sterling, Zale
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