Signet's total sales for the Second Quarter of fiscal 2018 were $1.4 billion, up $26.2 million or 1.9%, compared to a decrease of 2.6% in the 13 weeks ended July 30, 2016 (Q2 2017). However, the jeweler’s first-half sales fell 5% to $2.8 billion, with profit sliding 25% to $171.9 million. The company also announced that it has agreed to acquire R2Net for $328 million in an all cash transaction. R2Net is the owner of JamesAllen.com, a fast-growing online jewelry retailer, as well as Segoma Imaging Technologies, who provides R2Net machines to enable delivery of next-generation digital shopping experience for jewelry. Virginia C. Drosos, Chief Executive Officer of Signet Jewelers said, “This is a highly strategic acquisition for Signet. The James Allen brand and R2Net’s technologies and innovative approach present a unique opportunity to rapidly enhance our digital capabilities and create a distinctive customer shopping experience which more seamlessly integrates our digital and physical retail platforms.”
During the quarter, same store sales (SSS) were up 1.4%, driven by eCommerce platform improvements, Mother's Day performance and timing, effective marketing and bridal promotion initiatives. They note that the financial impact of Mother's Day is typically split between first quarter and second quarter, however, in Fiscal 2018, it was entirely a second quarter impact. Sales increases were driven predominantly by fashion jewelry including bracelets, rings, and necklaces. In addition, branded bridal also contributed to the sales increases. eCommerce sales in the second quarter were $82.2 million, up $12.6 million or 18.1%, compared to $69.6 million in the second quarter Fiscal 2017. Both mall and off-mall stores delivered sales growth.
By operating segment, Sterling Jewelers' SSS increased 1.8%, driven by increases in fashion jewelry as well as bridal. Average transaction value (ATV) increased 5.2%, and the number of transactions declined 2.9% with increases in Kay partially offset by a decline in transactions at Jared. Higher-priced branded jewelry outperformed lower-priced merchandise. Zale Jewelry's SSS increased 1.6%. ATV increased 0.2%, and the number of transactions increased 0.4%. Sales increases were driven principally by strong performance in Canada broadly across its bridal and fashion portfolios. Piercing Pagoda's SSS increased 7.0%. ATV increased 9.1%, while the number of transactions decreased 3.1%. Higher sales of 14 kt. gold chains, children's and religious jewelry as well as piercings drove the higher sales. UK Jewelry's SSS decreased 3.4%. ATV increased 14.4% and the number of transactions decreased 15.5%. The SSS decline was driven principally by fewer transactions in relatively lower-priced fashion jewelry. Strong sales of prestige watches drove ATV higher. "Our encouraging second quarter performance reflects Signet's fundamental competitive strengths and the progress we are making on our strategic priorities. We delivered positive same store sales performance and managed our cost base to deliver operating margin expansion in a highly promotional environment." Drosos added.