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Signet Sales Drop as US Retail Challenges Continue

August 31, 2023  |  Joshua Freedman
Zales store in Wesley Chapel Florida Signet 1280 USED 083123

Signet Jewelers’ sales fell in the second fiscal quarter as middle America’s spending slowed and engagements remained at depressed levels.

Revenue declined 8% year on year to $1.61 billion for the three months that ended July 29, the US retailer reported Thursday. Signet shares rose 6% in early trading Thursday, as sales exceeded the company’s forecast of $1.53 billion to $1.58 billion. Net profit slumped 48% to $75.1 million.

Bridal sales dropped 7% to $735.5 million, while revenue from fashion jewelry slipped 9% to $569.7 million. The only segment that saw growth was services, with revenue up 4% at $177.2 million.

A fall in dating during the Covid-19 pandemic has led to a lull in engagements, management reiterated — an explanation the company gave for its decline during the first quarter, too.

The company cited a “continued impact of heightened inflationary pressure on consumers’ discretionary spending, as well as the decline in engagements during the first half.” The addition of Blue Nile following Signet’s 2022 acquisition of the online retailer offset the decrease.

The company’s Kay Jewelers banner saw sales slide 8% to $567.1 million. Revenue at Zales slipped 12% to $279.4 million, with Jared down 13% to $265.2 million. Sales at digital banners — including Blue Nile and James Allen — jumped 85% to $164.2 million.

Group sales for the first half of the fiscal year declined 9% to $3.28 billion. Net profit climbed to $172.5 million from $61.9 million a year earlier, reflecting charges related to a legal settlement in the previous 12 months.

The jewelry maintained its full-year prediction of a 7% to 9% decline in sales for the full financial year, predicting total revenue of $7.1 billion to $7.3 billion.

However, it expects the challenges in engagements to continue through the current fiscal year, which ends in early 2024, “with some expected recovery in engagements beginning later in the year and continuing to rebound over the next three years.”

Discretionary spending on jewelry “will continue to be adversely impacted by rising prices on necessities such as gas and groceries,” the retailer added.

Main image: A Zales store in Wesley Chapel, Florida. (Shutterstock)

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