Strong Holiday Lifts Signet to 4Q Profit

RAPAPORT… Signet Jewelers returned to profit in the fourth fiscal quarter and recorded growth in same-store sales, as the company’s turnaround plan appeared to be working before the coronavirus crisis hit.

The retailer reported net income of $187.1 million for the three months ending February 1, versus a loss of $107.9 million a year earlier. Same-store sales rose 2.3%, even as total revenue was flat at $2.15 billion, the company said Thursday.

“We delivered our best overall holiday business performance in four years,” noted Signet CEO Gina Drosos. “As we entered fiscal 2021, our momentum from holiday continued, including a strong Valentine’s Day selling period, validating that the strategic initiatives and investments we made in the first two years of our Path to Brilliance transformation are delivering results.”

Same-store sales in North America increased 2.9% for the quarter, with total revenue for the region up 0.6% to $1.95 billion, reflecting improvements at physical stores and in e-commerce. The jeweler noted growth in its bridal and fashion categories, with the launch of new collections — including Center of Me and Marilyn Monroe — contributing to the increases.

Same-store sales at its Zales brand climbed 6%, with revenue rising 4.1% to $480.1 million. Sales at James Allen, Signet’s flagship online platform, jumped 33% to $84.2 million.

Those increases outweighed a weaker performance at Kay Jewelers, where same-store sales increased 0.6% but revenue fell 1.2% to $827.3 million. Same-store sales at Jared fell 2%, with total sales at that brand declining 3.9% to $367.2 million. Group-wide e-commerce sales rose 15% to $299.9 million.

Group full-year sales dropped 1.8% to $6.14 billion, with same-store sales rising 0.6%. The discrepancy reflects the company’s net closure of 164 locations during the year as part of its transformation program. Profit came to $105.5 million, compared to a loss of $657.4 million for the previous year.

At present, all of Signet’s stores in the US and Canada are closed as the countries battle the spread of the coronavirus. It’s not clear when they will reopen, and the company has chosen not to predict any results for the new financial year that started February 2.

“While it is difficult in the current environment to reflect on the past, it’s important to consider where we’ve been and look ahead with the expectation of recovery,” Drosos continued.

Signet’s stock price rose 29% in early trading Thursday, but was still 67% lower than on February 20. Since then, its shares have plummeted due to concerns over the pandemic and its impact on US retail.

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