Signet Jewelers, North America's largest retail chain for diamond jewelry, endured an uninspiring fourth quarter as weak holiday sales weighed down revenues, sending the jewelry group to a combined 6% loss in Q4 and a 0.1% loss on Fiscal Year 2019. Signet's total Q4 sales (in the 13 weeks ended February 2, 2019) were $2.15 billion, down $138.4 million or 6.0% on a reported basis and 5.4% on a constant currency basis. Total Q4 same store sales performance declined 2.0% year-over-year, posting uneven results as demand for jewelry from their legacy stores in particular slumped, while customers were more interested in their newer offerings. Signet's total sales for FY2019 were $6.2 billion, down $5.9 million, or 0.1%, compared to FY 2018. Same store sales for the year also declined by 0.1%. The company reported a loss of $657.4 million, compared with a profit of $519.3 million the previous year.
The fourth quarter was characterized by mixed results at Signet’s various outlets. Same store sales at most of their fleet of more traditional stores such as Kay (-1.6%), Jared (-8.4%), Signet’s U.K. division (-7.3%), and e-tailer James Allen (-1.4%) failed to meet expectations, but Piercing Pagoda sales surged by 17.1%, while Canadian chain Peoples and U.S. chain Zales ticked upward by 2.1% and 2% respectively. While online sales at James Allen for the year increased by 14.6%, the company attributed its Q4 decline to "a higher than expected unfavorable impact related to [the Supreme Court’s decision on online sales tax], as well as a more competitive online jewelry marketplace." James Allen now collects sales tax on half its sales, and that number will likely grow in the next year, Drosos said on a conference call following the release of its financial results.
CEO Virginia C. Drosos said progress was made on Signet's three-year Path to Brilliance transformation plan, "achieving double-digit eCommerce growth [and] delivering $85 million of net cost savings. However, "she added, "we did not finish the year as strongly as expected due to a highly competitive promotional environment, continued consumer weakness in the UK, and lower than expected customer demand for legacy merchandise collections that impacted our holiday fourth quarter results." As part of its cost-cutting efforts, Signet offered a “voluntary transition program” to its more than 3,000 corporate employees in Akron, Ohio and Dallas earlier this year. The retailer has a cost-savings figure it wants to hit via the voluntary transition program; if it does not achieve that figure, then layoffs will follow. The company also will close its manufacturing facility in Dallas, cutting 122 jobs. They also announced plans to close 150 more stores this year after closing about 260 this year.
Discussing FY 2020, Signet said it plans to take a “faster” and more “aggressive” approach to its transformation plan, strategically reducing its number of stores and reducing its exposure to “lower-grade malls,” said executives during its earning call. For the first time in its history, the company plans to spend more on digital and social advertising than on TV advertising in fiscal 2020, according to executives. Signet’s revenue was down slightly on the year to $6.24 billion, and sales for the coming year are expected to be between $6-$6.1 billion with same-store sales flat at best. First quarter sales are projected to be between $1.42-$1.44 billion with same-store sales projected to be down at least a half-percent.