Signet Beats Expectations in Q4, Leans on Online Sales

With its stores closed in light of the coronavirus, the jeweler is cutting costs and looking to online sales to help carry it through rough waters.

Lenore Fedow lenore.fedow@nationaljeweler.com

A 14-karat white gold and diamond pendant (1.5 carats total weight) from Kay Jewelers’ new “Center of Me” collection. The collection did particularly well in the fourth quarter and the full year.

Akron, Ohio—Signet Jewelers Ltd. ended its fiscal year on a high note, posting double-digit growth in ecommerce sales and topping analyst expectations for fourth-quarter revenue and same-store sales growth.

In the months ahead, however, the giant specialty jeweler—like so many brick-and-mortar businesses—faces unprecedented challenges as it figures out how to survive the potentially long-term shuttering of most of its stores.

In the fourth quarter ending Feb 1., sales totaled $2.15 billion, down 0.1 percent year-over-year, with same-store sales up 2 percent.

Analysts expected $2.12 billion in revenue and same-store sales growth of 1 percent.

For the full year, sales totaled $6.1 billion, down 2 percent, with same-store sales up 1 percent.

On an earnings call Thursday morning, CEO Virginia Drosos said the company’s holiday momentum continued through the fourth quarter, with strong Valentine’s Day sales and a positive response to its marketing.

Now, with all its 2,800 locations in North America temporarily closed in response to the coronavirus pandemic, Signet must cut costs and lean on online sales in order to navigate the crisis.

“We’re leveraging the expertise of our digitally native banner JamesAllen.com to rapidly advance our online selling assistance tools across all of our banners,” said Drosos.

“To achieve immediate ecommerce impact, we are focused on enhancing search and browse, easier checkout, and even more advanced custom design capabilities to create an optimized and frictionless shopping experience for customers,” she added.

Ecommerce sales in the fourth quarter grew 15 percent to $299.9 million, accounting for 14 percent of all sales, up from 12 percent last year, while brick-and-mortar sales grew 1 percent.

Full-year ecommerce sales were up 10 percent, clocking in at $750.4 million and accounting for 12 percent of sales, up from 11 percent last year, while brick-and-mortar sales dipped 1 percent.

In North America, where Signet’s banners include Kay, Jared and Zales, fourth-quarter same-store sales grew 3 percent, ecommerce sales 15 percent, and brick-and- mortar same-store sales 1 percent, with growth seen across all mall-based banners.

For the full year, North American same-store sales were up 1 percent, ecommerce sales 11 percent, and brick-and-mortar same store sales down 0.2 percent.

The bridal and fashion category did particularly well on a same-store sales basis for the quarter and the full year, which the company attributed to its new collections, “Center of Me” and “Marilyn Monroe.”

The percentage of sales from new merchandise increased for the full year, particularly its Center of Me and “Love +

Banner will be right here …

Be Loved” collections, though it was offset by a decline in legacy product sales.

Sales in the watches and other categories were down on a same-store sales basis for the quarter and the year.

By banner, e-tailer James Allen was the top performer with same-store sales up 33 percent in the fourth quarter and up 12 percent for the full year.

Comps at Kay Jewelers were up 1 percent for the quarter and unchanged for the year. At Zales, same- store sales climbed 6 percent in the quarter and were up 3 percent for the year.

Same-store sales at Jared dipped 2 percent for the quarter and were down 3 percent for the year.

Piercing Pagoda, which tends to be a top performer for the company, saw comps climb 8 percent in the quarter and 11 percent for the year.

Canadian chain Peoples Jewellers posted a 3 percent jump in same-store sales for the quarter, but reported a 1 percent dip for the full year.

On the earnings call, Chief Financial Officer Joan Hilson reiterated the company’s plan to exit failing malls and close most of its regional banners, stores like JB Robinson Jewelers, Belden Jewelers and Gordon’s Jewelers.

Hilson said the company was looking at “selective repositioning” of certain stores to off-mall locations, but said the coronavirus pandemic could change its plans.

Same-store sales at its regional banners were down 8 percent in the quarter and 11 percent for the year.

In light of the coronavirus pandemic, Signet declined to provide financial guidance for fiscal 2021.

"What’s paramount now is that we are moving quickly and aggressively to strengthen Signet’s financial flexibility by reducing capital expenditures, driving transformational cost savings, and accelerating optimization of our real estate footprint,” Drosos said in a press release announcing the financial results.

With Signet stores closed for now, employees will receive benefits and pay—a combination of base pay and available paid time off—through April 4, at which time the company said it will “further assess the situation.”

Upcoming changes for employees will include reduced work hours, furloughs, and reduced compensation across its stores and support center.

Drosos noted that executives have taken a voluntary 50 percent base salary reduction, with half replaced with equity grants, and that its board has reduced its retainer fees by 50 percent to be compensated entirely in common shares of Signet.

A portion of executive bonuses have also been placed into an emergency relief fund for colleagues.

Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

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