Akron, Ohio-Signet Jewelers Ltd. reported a double-digit drop in third-quarter sales as business remains slow to recover, but it is still optimistic about the holiday season ahead.
During an earnings call this morning, Signet CEO Virginia C. Drosos said fine jewellery is “experiencing its second COVID,” referring to the initial sales struggles during the early days of the pandemic, but said she is confident a rebound is ahead.
The jewellery giant, which is the parent company of several major jewellery store chains including Zales, Jared and Kay Jewelers, noted an increase in the number of engagement rings sold over the 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 that engagements typically occur within three years of a couple dating, a trend that was interrupted by the COVID-19 pandemic, which resulted in fewer engagements this year.
However, the number of engagements is expected to pick up later in fiscal 2024, with a more robust recovery expected in fiscal 2025.
For the quarter ended 28 October, Signet’s sales totalled $1.4 billion, down 12 percent year-on-year, but at the upper end of its sales guidance for the quarter of $1.36 billion to $1.41 billion.
Same-store sales were down 12 per cent.
Drosos noted that the third quarter is typically unimpressive, as it’s the only quarter without a major gifting holiday, and it’s also when the company invests in marketing for the upcoming holiday season.
For the first nine months of the year, Signet’s sales totalled $4.67 billion, down 10 percent from the same period last year.
Same-store sales for the period were down 13%.
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 totalled $1.3 billion, down 12 percent versus the prior year.
Same-store sales were also down 12 percent.
Signet’s international banners include Ernest Jones and H. Samuels.
International sales totalled $94 million, down 1 percent over the prior year. Same-store sales declined 5 percent.
The company recently sold 15 Ernest Jones stores to Watches of Switzerland for a multiple of $53 million, which will add $12 million to Signet’s fourth quarter earnings.
Signet said it may sell an additional six Ernest Jones stores to Watches of Switzerland in the fourth quarter.
“The sale of this non-strategic business allows Signet to accelerate the execution of key elements of our UK transformation plan,” the company said.
Drosos predicted strong demand for natural diamonds as oversupply begins to ease, adding that De Beers’ recent marketing investment should support the category.
While engagement ring sales are down, bespoke jewellery, particularly from Jared Foundry, has been popular, with unit growth in these stores up 40 per cent in the quarter.
Over the Black Friday weekend, jewellery under $1,000 remained popular, with the Banter by Piercing Pagoda banner performing particularly well.
Signet’s services category, which includes its extended service agreements, customisation, repairs and piercing, continued to grow, with sales up 5 percent for the quarter and year-to-date.
In July, Signet Jewelers announced that it had acquired the assets of Service Jewelry Repair National Repair Center, or SJR, allowing it to bring more repairs in-house.
Looking ahead to the holiday season, Drosos said, “Jewellery continues to be an important gift category, especially among Gen Z.”
For fiscal 2024, Signet lowered its guidance slightly to reflect the loss of an estimated $25 million in sales following the sale of the 15 Ernest Jones stores to Watches of Switzerland.
It now expects revenue of $7.07 billion to $7.27 billion, compared with its previous guidance of $7.1 billion to $7.3 billion.
For the fourth quarter, the company expects sales to be in the range of $2.4 billion to $2.6 billion.
