Signet’s Bridal Strong in Q1 as ‘Year of the Wedding’ Continues
From its bridal offerings to a major lawsuit settlement, here are five things to know about the company’s first quarter results.
Signet is the parent company of several large jewelry store chains, including Zales, Jared and Kay Jewelers.
The jewelry giant’s bridal jewelry did especially well, and the company is maintaining its fiscal 2023 outlook in light of inflationary pressures, among other issues impacting consumers.
Here are five things to know about its recent earnings report, released Thursday.
Signet had a good first quarter.
For the quarter ending April 30, Signet’s sales totaled $1.8 billion, up 9 percent year-over-year, with same-store sales climbing 3 percent.
“Signet’s strong performance this quarter reflects our team’s successful execution and agility amidst retail headwinds,” said CEO Virginia C. Drosos in a press release.
“We generated nearly 9 percent top-line growth, including 2.6 percent organic sales growth, enabled by our healthy inventory position, connected commerce capabilities and data-driven marketing.”
The company has also been giving more attention to its services segment in recent years, including repairs.
Its services division reported a 15 percent year-over-year increase in revenue.
North American sales were strong while international sales surged.
Signet’s North American banners include Zales and Kay Jewelers as well as Peoples in Canada.
Signet’s first-quarter sales in the region totaled $1.7 billion, with same-store sales down 5 percent year-over-year.
The lower same-store sales were attributed to a higher average transaction value but fewer transactions. The average transaction value was up more than 19 percent year-over-year and up 30 percent compared with pre-pandemic fiscal 2020.
Signet’s international banners include Ernest Jones and H. Samuels.
International sales totaled $110 million, nearly doubling year-over-year, up 92 percent.
Same-store sales more than doubled, up 103 percent, which Signet said reflected higher average transaction values and number of transactions. There were also more operating restrictions last year than in the current fiscal year.
Signet is maintaining its fiscal outlook.
Signet is expecting a good year ahead, but remains cautious in light of inflationary pressures and a return to travel.
Revenue for fiscal 2023 is expected to be in the range of $8.03 billion to $8.25 billion, above last year’s total of $7.8 billion.
“To be very clear, our fiscal 2023 outlook factors in a level of pressure on the consumer similar to what we’re currently experiencing. Our outlook does not anticipate a material worsening of macroeconomic factors, which could impact consumer spending patterns and have [an] associated impact on our business performance,” said Chief Financial Officer Joan Hilson on the company’s earnings call Thursday morning.
“That said, we are committed to controlling what we can, such as our merchandise assortment, tailored marketing, and cost disciplines,” she added.
Drosos is confident in the company’s ability to weather any headwinds it might encounter.
“We believe no other company in the jewelry industry has this same ability to adjust dynamically to market conditions across its banner portfolio, and continue to grow even in the face of challenges to a particular part of the business,” she said.
The bridal category put on an impressive performance.
This year is expected to be the “year of the wedding,” with about 2.5 million ceremonies expected to take place.
“In our big businesses, we delivered more than $80 million more in total bridal sales than in Q1 last year,” Drosos said on the call.
The company has seen an increase in sales of wedding bands, anniversary bands, bridal party jewelry, and gifts for the bride and groom, she said.
“Weddings are revenue drivers for Signet and an opportunity to establish lifetime relationships, not only with brides and grooms, but entire wedding parties. They are a critical point of entry, which we are capitalizing on.”
Signet has settled a long-standing legal battle.
For years, the company’s Sterling Jewelers division has been in a contentious legal battle with a group of women who say when they worked for Sterling, they were paid less than their male colleagues and passed over for promotions in favor of less qualified men.
After 15 years of legal back-and-forth, Signet announced it has reached a $175 million settlement in the case.
Drosos made a point of highlighting how the company has altered its management practices in recent years.
She noted the company’s $15 minimum wage, employee benefits, leadership development, and training.
“And now, we've settled this nearly 15-year-old legal matter, so we can continue our focus on an inclusive and highly engaged culture that will allow our company to truly shine,” she said.
The current agreement, originally set to expire in 2020, will now go through June 2023.
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