A Zales Jewelers store, a subsidiary of Signet Jewelers, in New York.
Mark Kauzlarich/BloombergSignet Jewelers shares jumped 7% on Thursday, following the company’s upbeat holiday sales numbers, its best holiday showing in nearly a decade.
Its CEO attributed the success to the company’s multiyear transformation, which emphasized digital capabilities long before Covid-19 hit.
Signet (ticker: SIG) said that preliminary sales for the nine-week holiday period ending Jan. 2 were flat year over year, at $1.8 billion.
Same-store sales increased 5.6% from the year-ago period, its best gain in nine years, boosted by a 60.8% spike in e-commerce, as bricks-and-mortar sales slipped just over 4%. Signet said it saw broad-based strength, with both bridal and fashion jewelry notching double-digit sales growth.
All of its U.S. brands—which include Kay Jewelers, Jared, and Zales—posted positive comps.
The company logged 7.8% same-stores sales growth in its North American segment, on a 4.4% rise in transactions, whose value climbed 1.6% year over year. While sales at its mall-based locations were “slightly negative,” off-mall stores did better, “supporting the company’s real estate optimization strategy,” although overall bricks-and-mortar sales overall were down 0.8%. E-commerce jumped 57.5%.
Its international operations took a hit from Covid-19 lockdowns in the U.K., which led to a 19.2% same-store sales decline, although e-commerce sales jumped 92.8%.
For the fourth quarter as a whole, Signet predicts comparable sales will be up 4% to 5%, for total sales of roughly $2.1 billion, ahead of consensus estimates on both counts.
As of the start of January, the company had closed 355 of its 380 planned store closures for the fiscal year.
CEO Gina Drosos tells Barron’s that this “holiday was three years in the making,” referring to the company’s Path to Brilliance strategy it launched in 2018.
She notes that jewelry has been one of the slower categories of retail to move to e-commerce, but that the pandemic accelerated this trend, with digital sales moving from 5% when Drosos took the helm in 2017, to more than 20% in the third quarter of 2020, even with the company’s stores reopened.
She attributes that growth to the company’s investment in omnichannel capabilities: It now has hundreds of virtual sellers who can chat with customers to provide consolations online, or video chat in-store with shoppers at home.
In many ways, the online buying experience may be superior, as Signet’s proprietary technology allows it to photograph a diamond and enlarge it 40 times, so “someone can see a diamond better virtually than in person.”
That is evident in the big jump in e-commerce bridal sales at Kay and Zales, as engagement rings are a major purchase for most couples who may have previously shied away from buying them online.
Drosos says that while the company continues to see value in its distribution centers—it was able to ship 98% of orders on time thanks to increased capacity—Signet is increasingly using its retail locations for fulfillment as well. It’s a trend we’ve seen across the retail industry, and one that she thinks will continue post-pandemic, as it allows the company to maximize its inventory efficiency.
Ultimately, she argues that Signet can keep taking market share in the fragmented jewelry business, thanks to its technology investments and ability to target different kinds of consumers—from marketing to value-conscious consumers well ahead of the traditional holiday season to offering curbside pickup for procrastinators.
Write to Teresa Rivas at teresa.rivas@barrons.com
January 15, 2021 at 02:10AM
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Signet Pops on Upbeat Holiday Sales. CEO Says to Expect More Gains. - Barron's
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