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Signet Slashes Forecast as Sales Slump

June 8, 2023  |  Joshua Freedman
Signet Kay store Bethesda MD credit Shutterstock

Signet Jewelers’ sales fell in the first fiscal quarter as consumer sentiment deteriorated and bridal demand slowed, prompting the retailer to lower its outlook for the rest of the year.

Revenue dropped 9% year on year to $1.67 billion in the three months that ended April 30, the US jewelry retailer reported Thursday. Same-store sales — at branches open for at least a year — slid 14%.

The company endured “macroeconomic headwinds that worsened late in the quarter,” said CEO Virginia Drosos. “In line with our predictions, there were fewer engagements in the quarter resulting from Covid-19’s disruption of dating three years ago.”

Sales sank at all of Signet’s brick-and-mortar store chains, including Kay Jewelers, Zales and Jared. Revenue from digital banners grew 80% to $168.2 million, reflecting the acquisition of Blue Nile in August 2022. The group also owns e-commerce brand James Allen.

Across the company, bridal sales declined 10% to $768.7 million, with the fashion category down 13% at $587 million. Revenue from services — such as repairs — rose 5% to $182.1 million.

Net profit came to $97.4 million, compared with a loss of $83.5 million a year earlier, when the company incurred $190 million in charges related to the settlement of a litigation case.

Signet expects sales to total between $1.53 billion and $1.58 billion in the second fiscal quarter, translating to a year-on-year decline of 14% to 17%. It also projected a drop of 7% to 9% for the full financial year, to reach $7.1 billion to $7.3 billion, compared with an earlier prediction of $7.67 billion to $7.84 billion. The current fiscal year will end on February 3, 2024.

US jewelry-industry revenues will likely fall at a greater rate than the company had initially expected, management said. The engagement segment — which usually represents more than 50% of Signet’s merchandise sales — will only recover later this fiscal year and will continue to rebound after February 2024, it forecast.

The guidance “reflects a recent deceleration of trends that have persisted into the second quarter, including a softer-than-expected Mother’s Day, increasing macroeconomic pressures on consumers at more price points, and deeper competitive discounting,” said Joan Hilson, Signet’s chief financial, strategy and services officer. “We built our fortressed balance sheet to strategically invest during periods of disruption.”

Signet’s share price was down 10% in early trading Thursday.

Image: A Kay Jewelers store in Bethesda, Maryland. (Shutterstock)

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