Signet Jewelers, the world's largest retailer of diamond jewelry, reports its same store sales for the third quarter of fiscal 2017 (ended October 29) fell 2.0%, while total sales fell $30.2 million to $1.2 billion, a 2.5% decline. Nonetheless, the results outstripped the company’s own guidance of a 3 to 5 percent decline. As Mark Light, Chief Executive Officer of Signet Jewelers said, “We expected challenging market conditions to result in a sales decline. However, our continuing ability to execute in a difficult environment led to results that were somewhat better than our expectations." And indeed, Signet's share price rose between 4 and 5 percent on Tuesday following the announcement.
Fashion diamond and gold jewelry performed well, as did select branded bridal, but the best performance came from Piercing Pagoda, whose comps increased 9.5%, principally on the strength of gold chains and diamond jewelry. Average transaction value increased 14.6%, while the number of transactions decreased 4.3%, primarily due to lower price point body jewelry items and white metals. Signet recorded quarterly declines in its leading U.S. chains: Kay (-2.9%) and Jared (-4.6%) among the Sterling Jewelers division, and Zales (-1.0%) of the eponymous Zales division. Its UK Jewelery division saw sales increase 3.6% to $130.3 million.
CEO Light writes in their press release, "Signet achieved some important wins during the quarter. Fashion diamond and gold jewelry performed well as did select branded bridal. We saw success in a variety of selling channels including kiosks, outlets, and on-line. In addition, our teams delivered solid expense and inventory management leading to strong free cash generation. The Zale integration is running well and synergies remain on target. While near term headwinds may persist, we are confident that we made the right investments into initiatives designed to drive growth and deliver on our fourth quarter expectations."
JCK's Rob Bates discussed the conference call following the release of the financial results: CEO Mark Light singled out “wins” during the quarter, pointing to good sales of “stacked” bracelets, earrings, and diamond fashion, including the Vera Wang and Neil Lane collections. E-commerce and outlets also did well, he said. He had high hopes for the second year of Ever Us, noting that “beacons” typically do better in their second year. Still, he admitted the consumer environment is “challenging” and added, “We are glad the election is behind us.” The company still expects comps to fall 2 to 4 percent in the all-important fourth quarter, though it has raised its earnings guidance. And Light believes fundamentals still favor the company.