RAPAPORT… Signet Jewelers has agreed to purchase off-mall retailer Diamonds Direct USA for $490 million in a push to expand its bridal business.
Diamonds Direct sells loose and mounted stones to consumers, with a focus on engagement rings and wedding bands. Headquartered in Charlotte, North Carolina, it operates at least 22 stores, mainly in the eastern half of the US. It claims to be the US’s leading direct importer of diamonds, sourcing goods out of a buying office in the Israel Diamond Exchange.
It is currently owned by New York-based investment firm Blackstone, which bought the business in 2015 for an undisclosed sum.
Acquiring Diamonds Direct “will further drive shareholder value with its distinct bridal-focused shopping experience and add a new entry point as we build lifetime customer relationships and strive to reach our $9 billion revenue goal over time,” Signet CEO Virginia Drosos said Tuesday.
Signet plans to close the all-cash deal in the fourth fiscal quarter, it noted. Itay Berger, founder of Diamonds Direct, will continue to lead the company, reporting to Drosos, while he and other key Diamonds Direct executives have agreed to use a portion of their transaction proceeds to buy Signet shares. The company’s store fronts and branded offerings will remain intact, with the business becoming a banner under the Signet group.
“While Signet will infuse their resources into our business to fuel our growth, the heart of who we are, how we operate and what we believe in will not change,” a spokesperson for Diamonds Direct added.
“We are proud to join the Signet family and look forward to continuing to welcome our current and new customers into our showrooms, as always, to provide them with the unparalleled product and service they’ve come to expect from us.”
The takeover is Signet’s third significant deal in five years. In 2017, the retailer acquired R2Net, the owner of digital jeweler James Allen, for $328 million, while earlier this year it bought subscription-based jewelry-rental platform Rocksbox for an undisclosed price.
Signet has also raised its sales forecast for the third fiscal quarter running to the end of this month, predicting revenue of $1.42 billion to $1.45 billion — up to 12% higher than a year earlier. It had previously anticipated a sales increase of around 1% for a total of up to $1.31 billion.
“Customers are showing positive response to our new product launches, and the reduction in government stimulus and customer shift to spending on entertainment and travel are having less impact than we previously anticipated,” explained Joan Hilson, chief financial and strategy officer. “While there remain factors beyond our control, our strengthened supply chain and vendor partnerships gave us the ability to plan earlier receipt of holiday product, and we currently do not expect any material supply chain disruptions.”
The company uses air freight for transporting most of its merchandise, helping it avoid the congestion currently affecting ocean-based shipping, Hilson added.
Image: A Diamonds Direct store. (Diamonds Direct)