Signet Jewelers’ Q3 Sales Down 12%

FinancialsDec 05, 2023

Signet Jewelers’ Q3 Sales Down 12%

The retailer is still expecting a strong holiday season with improving demand for natural diamonds.

Neil Lane lab-grown diamond engagement ring
A lab-grown diamond engagement ring from the new “Neil Lane Artistry” collection at Signet Jewelers banner Kay Jewelers. Signet Jewelers reported a 12 percent decline in third-quarter revenue as engagement ring sales remain slow.
Akron, Ohio—Signet Jewelers Ltd. reported a double-digit drop in sales in the third quarter as engagements remain slow to recover, but it is still bullish on the holiday season. ahead

During an earnings call this morning, Signet CEO Virginia C. Drosos said fine jewelry is “experiencing its second COVID,” referencing the initial struggles to make sales during the early days of the pandemic, but said she is confident a rebound is ahead.

The jewelry giant, which is the parent company of several large jewelry store chains including Zales, Jared, and Kay Jewelers, noted an uptick in the number of engagement rings sold through Black Friday weekend.

Engagement units have begun to rebound in recent weeks, said Drosos, who reiterated the retailer’s prediction of a gradual three-year recovery.

Signet’s data shows engagements typically occur within three years of a couple dating, a trend that was interrupted by the COVID-19 pandemic resulting in fewer engagements this year.

However, the number of engagements is expected to pick up later in fiscal 2024, with a more robust rebound expected in fiscal 2025.

For the quarter ending Oct. 28, Signet’s sales totaled $1.4 billion, down 12 percent year-over-year but at the high end of its sales forecast for the quarter of $1.36 billion to $1.41 billion.

Same-store sales fell 12 percent.

Drosos noted the third quarter is usually unimpressive as it’s the one quarter without a major gifting holiday and is also when the company is investing in marketing for the upcoming holiday season.

In the first nine months of the year, Signet’s sales have totaled $4.67 billion, down 10 percent year-over-year.

Same-store sales in this period were down 13 percent.

In North America, Signet’s banners include Zales and Kay Jewelers as well as Peoples in Canada.

Signet’s third-quarter sales in the region totaled $1.3 billion, down 12 percent year-over-year.

Same-store sales also were down 12 percent.

Signet’s international banners include Ernest Jones and H. Samuels.

International sales totaled $94 million, down 1 percent year-over-year. Same-store sales were down 5 percent.

The company recently sold 15 Ernest Jones stores to Watches of Switzerland, with the accretive sale multiple generating proceeds of $53 million, which will add $12 million for Signet in Q4.

Signet said it may sell six additional Ernest Jones to Watches of Switzerland stores in the fourth quarter.

“The divestiture of this non-strategic business allows Signet to more quickly apply key elements of our U.K. transformation plan,” said the company.

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Drosos forecast strong demand for natural diamonds as the oversupply begins to abate, adding that De Beers’ recent marketing investment should bolster the category.

While engagement ring sales are down, custom jewelry, particularly from Jared Foundry, has been popular, with unit growth up 40 percent in the quarter for those stores.

Over Black Friday weekend, jewelry under $1,000 remained popular, with the Banter by Piercing Pagoda banner doing particularly well.

Signet’s services category, which includes its extended service agreements, customization, repairs, and piercings, has continued to grow, with sales up 5 percent in the quarter and year-to-date.

In July, Signet Jewelers announced it had acquired the assets of the Service Jewelry Repair National Repair Center, or SJR, allowing it to bring more repairs in-house.

Looking to the holiday season, Drosos said, “Jewelry continues to be an important gifting category, particularly among Gen Z.”

For fiscal 2024, Signet lowered its guidance slightly to reflect the loss of an estimated $25 million in revenue after selling the 15 Ernest Jones stores to Watches of Switzerland.

It now expects sales of $7.07 billion to $7.27 billion, compared with its prior guidance for sales of $7.1 billion to $7.3 billion.

In the fourth quarter, the company is expecting sales of $2.4 billion to $2.6 billion.

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