Signet's total sales for the 9 weeks ended December 30, 2017 (“Holiday Season”) were $1,881.7 million, down $59.2 million or 3.1%, compared to $1,940.9 million in the prior year, the group announced in a press release today. Same Store Sales (SSS) decreased 5.3%. Sales declines were primarily driven by weakness in the Sterling division (Kay, Jared, R2Net and Regional brands), impacted predominantly by the credit outsourcing transition* which accounted for approximately two-thirds of the decrease. R2Net was the best performer in the division, increasing sales 38.6% to $50.6 million. Signet’s overall eCommerce sales were $210.5 million, up $68.0 million or 47.7%, compared to $142.5 million in the prior year.
eCommerce sales growth was led by the Sterling division, reflecting the R2Net acquisition and the successful implementation of enhancements to its OmniChannel platforms, search efficacy, functionality, and digital and social media marketing. Investments in search engine optimization led to a 48% increase in page-1 keyword search results and drove a nearly 20% increase in traffic to Sterling banners. R2Net eCommerce sales were $50.6 million, up 38.6%. Virginia C. Drosos, Chief Executive Officer of Signet Jewelers, said: “During the Holiday Season, we made positive progress on our strategic priorities, offset primarily by the negative impact of the credit outsourcing transition, as evident by the mixed performance across our banners and channels. Our overall eCommerce business grew double-digits, and our Zale division, where our strategic initiatives are beginning to take hold unencumbered by the credit transition, delivered same store sales growth with strength in both bridal and fashion. Conversely, progress in our Sterling division was overshadowed by the negative impact of the credit outsourcing transition in stores.
Concerning Signet's financial guidance for the fiscal year 2018, the group reiterated its Fiscal 2018 SSS outlook and updated its Fiscal 2018 EPS guidance to reflect the positive impact of the Tax Cuts and Jobs Act in the United States. Signet anticipates the reduction in the U.S. corporate income tax rate to result in an effective tax rate in the range of 14% to 15% for its current fiscal year. Excluding the estimated benefit of U.S. tax reform, the company expects Fiscal 2018 EPS within its previous guidance range. The updated guidance from Signet including the impact of U.S. tax reform is for same-store sales growth down at a mid-single-digit rate and EPS of $6.45 to $6.50 vs. $6.33 consensus.
*At the end of 2017, Signet sold its prime-only credit quality accounts receivable to the card services business of Alliance Data Systems Corporation for the par value of $960 million, as well as the outsourcing of the credit servicing function of its existing and future non-prime accounts receivable to Genesis Financial Solutions. As part of the transaction, nearly all existing Signet team members supporting credit operations have been transferred to Alliance Data or Genesis, or retained by Signet to facilitate a smooth transition for Signet’s team members and customers. See a more complete analysis of the transition here.
Picture: Scott Eells, Getty Images