Signet Jewelers Has “Challenging” Q3 as Sales Slide

Jewelry
21/11/2017 15:58

Signet Jewelers announced its results for the 13 weeks ended October 28, 2017 (Q3 Fiscal 2018): total sales were $1,156.9 million, down $29.3 million or 2.5%, compared to a decrease also of 2.5% in the 13 weeks ended October 29, 2016. The retailer's same-store sales ("SSS") were down 5.0%, including an estimated 120 basis point negative impact that they attributed to weather-related incidents (read, hurricanes) and systems and process disruptions associated with outsourcing the credit portfolio. In October, Signet completed the first phase of strategic outsourcing of its credit portfolio to Alliance Data Systems and Genesis Financial Solutions, and says it is experiencing greater than anticipated disruptions related to the complex credit transition process.

Signet has shifted expectations for earnings per share (EPS) from their prior guidance of $7.16 - $7.56 down to the range of $6.10 - $6.50, which is well below analyst forecasts, and now expects Fiscal 2018 SSS to be down a mid-single-digit percentage. As a result, shares plunged nearly 16% pre-market on their drop in earnings and lowered guidance. Signet also highlights substantial progress on strategic initiatives, with double-digit eCommerce sales growth, improved fashion category performance in updated collections at key price points, enhanced digital marketing and streamlined promotions. Their acquisition of R2Net, owner of online jewelry retailer JamesAllen.com, was cited as the main driver of total eCommerce growth of 56.4%.

Virginia C. Drosos, Chief Executive Officer of Signet Jewelers, said: "Signet had a challenging third quarter. In addition to an anticipated sequential slowdown in our same-store sales, unfavorable weather-related incidents, along with unexpected disruptions during the transition of our credit services, further negatively impacted results. Encouragingly, within this backdrop, we advanced our strategic priorities, which are beginning to deliver results. We are seeing positive customer reaction to enhancements in our OmniChannel experience, as well as streamlined marketing messages and improved fashion assortment. We have also implemented several synergies from the R2Net acquisition ahead of plan. Unfortunately, these wins are being overshadowed by the systems disruptions and significant process changes associated with the outsourcing of our credit portfolio, with particular impact at Kay."

On another note, Signet Jewelers, together with Tiffany & Co., lead the jewelry retail industry in the Enough Project’s 2017 Conflict Minerals Company Rankings, as other companies from the industry lagged far behind. The new rankings report examines 20 of the world’s largest consumer electronics and jewelry retail companies on their efforts to support a conflict-free minerals trade and ensure their products aren’t linked to a range of abuses in the Democratic Republic of Congo.